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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

  • $4,034.35

  • $22,484.35

  • $2,426.35

  • $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:

  1. 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.
  2. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month.
  3. The ending finished goods inventory equals 10% of the following month's sales.
  4. 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.
  5. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month.
  6. The direct labor wage rate is $18.00 per hour. Each unit of finished goods requires 2.9 direct labor-hours.
  7. 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

  • $124,590

  • $237,640

  • $169,575

  • $113,050

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