1).

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.

Model	Annual Sales in Units
High F	11,200
Great P	17,200

National uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows:

	High F			Great P
Direct materials	$	39.20		$	26.60
Direct labor	$	18.80		$	14.40

Budget factory overhead:
Engineering and Design	2,640	engineering hours	$	462,000
Quality Control	13,070	inspection hours		324,000
Machinery	33,950	machine hours		642,960
Miscellaneous Overhead	26,630	direct labor hours		159,120
Total			$	1,588,080

National's controller had been researching activity-based costing and decided to switch to it. A special study determined National's two products have the following budgeted activities:

	High F	Great P
Engineering and design hours	1,080	1,560
Quality control inspection hours	5,760	7,310
Machine hours	20,400	13,550
Labor hours	12,120	14,510

Using the firm's volume- based costing, applied factory overhead per unit for the Great P model is: (Rounded to the nearest cent.)

Multiple Choice

• $65.15.

• $70.13.

• $45.92.

• $49.90.

• $57.80.

2).

Wings Co. budgeted $565,000 manufacturing direct wages, 2,500 direct labor hours, and had the following manufacturing overhead:

Overhead Cost Pool	Budgeted Overhead Cost			Budgeted Level for Cost Driver		Overhead Cost Driver
Materials handling	$	168,000		4,200	pounds	Weight of materials
Machine setup		14,700		490	setups	Number of setups
Machine repair		1,550		31,000	machine hours	Machine hours
Inspections		13,000		260	inspections	Number of inspections

Requirements for Job #971 which manufactured 4 units of product:

Direct labor	20	hours
Direct materials	230	pounds
Machine setup	40	setups
Machine hours	16,000	machine hours
Inspections	15	inspections

Using ABC, the materials handling overhead cost assigned to Job #971 is:

Multiple Choice

• $2,440.

• $750.

• $9,200.

• $800.

• $1,200.