Question
1) Bippus Corporation manufactures two products: Product X08R and Product P56L. The company uses a plantwide overhead rate based on direct labor-hours. It is considering
1)
Bippus Corporation manufactures two products: Product X08R and Product P56L. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products X08R and P56L.
| Activity Cost Pool | Activity Measure | Total Cost | Total Activity |
| ||
| Machining | Machine-hours | $ | 247,000 | 13,000 | MHs | |
| Machine setups | Number of setups | $ | 60,000 | 150 | setups | |
| Product design | Number of products | $ | 56,000 | 2 | products | |
| Order size | Direct labor-hours | $ | 260,000 | 10,000 | DLHs | |
| Activity Measure | Product X08R | Product P56L |
| Machine-hours | 10,000 | 3,000 |
| Number of setups | 110 | 40 |
| Number of products | 1 | 1 |
| Direct labor-hours | 6,000 | 4,000 |
Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product P56L?
A) $311,500
B) $373,800
C) $249,200
D) $418,000
2)
Ben Corporation manufactures two products: Product E05G and Product L64Y. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products E05G and L64Y.
| Activity Cost Pool | Activity Measure | Total Cost | Total Activity |
| ||
| Machining | Machine-hours | $ | 285,000 | 15,000 | MHs | |
| Machine setups | Number of setups | $ | 180,000 | 300 | setups | |
| Product design | Number of products | $ | 64,000 | 2 | products | |
| Order size | Direct labor-hours | $ | 350,000 | 10,000 | DLHs | |
| Activity Measure | Product E05G | Product L64Y |
| Machine-hours | 12,000 | 3,000 |
| Number of setups | 170 | 130 |
| Number of products | 1 | 1 |
| Direct labor-hours | 3,000 | 7,000 |
Using the plantwide overhead rate, the percentage of the total overhead cost that is allocated to Product E05G is closest to:
A) 27.87%
B) 19.00%
C) 30.00%
D) 50.00%
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Measuring Business Interruption Losses And Other Commercial Damages An Economic Approach
Authors: Patrick A. Gaughan
3rd Edition
1119647916, 9781119647911
