Michael co expects overhead costs of 60000 per month

12)
Michael & Co. expects overhead costs of $60,000 per month and direct production costs
of $24 per unit. The estimated production activity for the current accounting period is as
follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Units produced 11,500 9,000 8,250 11,250
The predetermined overhead rate based on units produced is: (Round the answer to 2
decimal places.)
12)
A)
$18.00 per unit.
B)
$2.67 per unit.
C)
$42.00 per unit.
D)
$1.50 per unit.
4

13)
Performance Bicycle Company makes steel and titanium handlebars for bicycles. It
requires approximately one hour of labor to make one handlebar of either type. During
the most recent accounting period, Barr Company made 7,000 steel bars and 3,000
titanium bars. Setup costs amounted to $84,000. One batch of each type of bar was run
each month. If a single companywide overhead rate based on direct labor hours is used to
allocate overhead costs to the two products, the amount of setup cost assigned to the
steel bars will be:
13)
14)
Traditionally, the most popular companywide base for allocating overhead to products
was:
14) 15)
Which type of cost driver is most appropriate for automated processes?
15) 16)
Which of the following allocation bases for automation costs would be an improvement
over direct labor hours?
A)
Machine hours
B)
Number of units sold
C)
Direct material cost
D)
Direct labor costs
16) 17)
Hazel Company allocates overhead based on direct labor hours. It allocates overhead
costs of $8,000 to two different jobs as follows:
Job 1: (10 hours) = $4,000; Job 2: (10 hours) = $4,000
The production process for Job 2 was then automated. Now Job 2 requires only two
hours of direct labor but four hours of mechanical processing. As a result, total overhead
increases to $12,000. Select the incorrect statement from the following.