Expected activity for the four activity drivers that would be used are Machine

Expected activity for the four activity drivers that

This preview shows page 32 - 37 out of 96 pages.

The plant manager has heard of a new way of applying overhead that uses cost pools and activity drivers.Expected activity for the four activity drivers that would be used are:Machine hours60,000Material moves20,000Setups3,000Quality inspections12,000
98. Refer to Figure 4-9. What is the amount of overhead allocated to the proposed job if Winter Manufacturing usesdirect labor hours as its only activity driver?d99.Refer to Figure 4-9. What is the total cost of the proposed job if Winter Manufacturing uses direct labor hours as itsonly activity driver?b100.Unit-level cost drivers create distortions whena101. The use of unit-based activity drivers to assign costs tends toa. overcost low-volume products.b. overcost high-volume products.c. undercost all products.
d. overcost all products.ANSWER: b
102. Which of the following is NOT a limitation of a plantwide overhead rate?c103. A possible solution to overcome distortions caused by unit level rates isd
Figure 4-10The Manoli Company has collected the following data for use in calculating product costs:Activity Data: (expected and actual)Rug cleanersSweepersTotalunits produced50,000250,000300,000prime costs$200,000$750,000$950,000direct labor hours10,00040,00050,000machine hours20,00010,00030,000number of setups2575100inspection hours1,2002,8004,000number of moves140210350Departmental Data: (expected and actual)MoldingAssemblyTotaldirect labor hoursrug cleaners5,0005,00010,000sweepers5,00035,00040,000total10,00040,00050,000machine hoursrug cleaners17,0003,00020,000sweepers3,0007,00010,000total20,00010,00030,000overhead costsmachining$120,000$30,000$150,000moving materials40,00030,00070,000setting up70,00010,00080,000inspecting products20,00030,00050,000total250,000 $100,000$350,000

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture