Question
1. DelauderEnterprises makes a variety of products that it sells to other businesses. The companys activity-based costing system has four activity cost pools for assigning
1. DelauderEnterprises makes a variety of products that it sells to other businesses. The companys activity-based costing system has four activity cost pools for assigning costs to products and customers. Details concerning that ABC system are listed below:
Activity Cost Pool | Activity Measure | Activity Rate | ||
Supporting assembly | Direct labor-hours (DLHs) | $ | 3.45 | per DLH |
Processing batches | Number of batches | $ | 193.30 | per batch |
Processing orders | Number of orders | $ | 83.05 | per order |
Serving customers | Number of customers | $ | 1,608.00 | per customer |
The cost of serving customers, $1,608.00 per customer, is the cost of serving a customer for one year. Grennon Corporation buys only one of the companys products. The details of last years purchases of this product are listed below:
Number of units purchased | 1,500 | units | |
Number of batches | 5 | batches | |
Number of orders | 2 | orders | |
Direct labor-hour requirement | 0.25 | DLHs per unit | |
Selling price | $ | 18.55 | per unit |
Direct materials cost | $ | 8.35 | per unit |
Direct labor cost | $ | 3.95 | per unit |
According to the ABC system, the total overhead cost for this customer this past year was closest to:
Multiple Choice
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$4,034.35
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$22,484.35
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$2,426.35
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$18,450.00
2. Luchini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:
- The budgeted selling price per unit is $111. Budgeted unit sales for April, May, June, and July are 7,100, 10,100, 13,300, and 14,000 units, respectively. All sales are on credit.
- Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month.
- The ending finished goods inventory equals 10% of the following month's sales.
- The ending raw materials inventory equals 30% of the following months raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $5.00 per pound.
- Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month.
- The direct labor wage rate is $18.00 per hour. Each unit of finished goods requires 2.9 direct labor-hours.
- Variable manufacturing overhead is $7.00 per direct labor-hour. Fixed manufacturing overhead is zero.
If the budgeted cost of raw materials purchases in April is $207,650 and in May is $282,625, then in May the total budgeted cash disbursements for raw materials purchases is closest to:
Multiple Choice
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$124,590
-
$237,640
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$169,575
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$113,050
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