1.) Sparrow Manufacturing manufactures small parts and uses an activity-based costing system.

Activity	Est. Indirect Activity Costs	Allocation base	Cost allocation rate
Materials	$70,000	Material moves	$2.00/move
Assembling	$240,000	Direct labor hours	$8.00/dir. labor hour
Packaging	$80,000	# of finished units	$0.80/finished unit

The following parts were produced in October with the following information:

Part	# Produced	Materials Costs	# Moves	Dir. Labor Hrs.
A	2,500	$2,500	800	200
B	3,500	$7,000	1,500	300
C	4,500	$11,250	2,200	1,000

Total unit cost for part B is:

a. $2.34.

b. $3.08.

c. $6.06.

d. $4.34.

2.) Kepple Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to the company's two products:

	Zips	Dees
Direct materials per unit	$ 140.00	$ 100.00
Direct labor per unit	$ 55.00	$ 50.00
Direct labor hours per unit	2.0	1.5
Annual production	25,000	40,000

Information about the company's estimated manufacturing overhead for the year follows:

Activities	Activity measures	Estimated overhead cost
Supervision and maintenance	Direct labor hours	$2,200,000
Batch costs	Number of batches	$ 212,500
Engineering changes	Number of engineering hours	$ 180,000
Total estimated manufacturing overhead for the year	$2,592,500

Total estimated direct labor hours for the company for the year are 110,000 hours. The company is evaluating whether it should use an activity-based costing system in place of its traditional costing system. Additional information about production needed for the activity-based costing system follows:

	Expected activity
	Zips	Dees	Total
Direct labor hours	50,000	60,000	110,000
Setups	2,000	500	2,500
Part types	1,800	1,200	3,000

The amount of manufacturing overhead that would be allocated to one unit of Zips using the traditional costing system would be closest to:

a. $23.57.

b. $32.86.

c. $35.35.

d. $47.14.

3.) Kepple Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to the company's two products:

	Zips	Dees
Direct materials per unit	$ 140.00	$ 100.00
Direct labor per unit	$ 55.00	$ 50.00
Direct labor hours per unit	2.0	1.5
Annual production	25,000	40,000

Information about the company's estimated manufacturing overhead for the year follows:

Activities	Activity measures	Estimated overhead cost
Supervision and maintenance	Direct labor hours	$2,200,000
Batch costs	Number of batches	$ 212,500
Engineering changes	Number of engineering hours	$ 180,000
Total estimated manufacturing overhead for the year	$2,592,500

Total estimated direct labor hours for the company for the year are 110,000 hours. The company is evaluating whether it should use an activity-based costing system in place of its traditional costing system. Additional information about production needed for the activity-based costing system follows:

	Expected activity
	Zips	Dees	Total
Supervision and maintenance	50,000	60,000	110,000
Batch costs	2,000	500	2,500
Engineering changes	1,800	1,200	3,000

The amount of manufacturing overhead that would be allocated to one unit of Zips using an activity-based costing system would be closest to:

a. $11.95.

b. $51.12.

c. $32.86.

d. $64.81.