Question
1. Quiz Company uses activity-based costing to determine product cost. The accounting department identified the following overhead activities, costs, and activity drivers for the coming
1. Quiz Company uses activity-based costing to determine product cost. The accounting department identified the following overhead activities, costs, and activity drivers for the coming year.
Activity | Estimated cost | Activity driver | Activity capacity |
Setting up equipment | $120,000 | Number of setups | 300 |
Ordering materials | 90,000 | Number of orders | 9,000 |
Maintaining machines | 210,000 | Machine hours | 21,000 |
Total overhead | $420,000 |
|
|
The following actual results were collected for the production of Model X and Model Y during the year.
| Model X | Model Y |
Units produced | 8,000 | 4,000 |
Prime costs | $160,000 | $100,000 |
Number of setups | 200 | 100 |
Number of orders | 3,000 | 6,000 |
Machine hours | 12,000 | 9,000 |
Determine the unit cost of Model X.
2. During the most recent shift, Quiz Company produced 50 units in 10 hours. Determine the velocity for the production process.
a. 5 units per hour
b. 0.2 units per hour
c. 5 hours per unit
d. 0.2 hours per unit
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