1-Younger, Inc. manufactures recliners for the hotel industry. It has two products, the Heater and the Massager, and total overhead is $3,160,000. The company plans to manufacture 400 Heaters and 100 Massagers this year. In manufacturing the recliners, the company must perform 600 material moves for the Heater and 400 for the Massager; it processes 900 purchase orders for the Heater and 700 for the Massager; and the companys employees work 1,400 direct labor hours on the Heater product and 3,400 on the Massager. Youngers total material handling costs are $2,000,000 and its total processing costs are $1,160,000. Using ABC, how much overhead would be assigned to the Heater product? $1,852,500

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2-Baxter Accounting Services estimates for next year revenues of $3,000,000, direct labor of $600,000, and overhead of $1,050,000. Under traditional costing, what is overhead rate is applied to audit jobs? 175% of direct labor

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3-Gant Accounting performs two types of services, Audit and Tax. Gants overhead costs consist of computer support, $300,000; and legal support, $150,000. Information on the two services is:

Audit Tax

Direct labor cost $50,000 $100,000

CPU minutes 40,000 10,000

Legal hours used 200 800

What is overhead applied to audit services using traditional costing? $150,000

What is overhead applied to tax services using traditional costing? $300,000

What is overhead applied to audit services using activity-based costing? $270,000.

What is overhead applied to tax services using activity-based costing? $180,000.

Gant Accounting performs tax services for Cathy Lane. Direct labor cost is $1,200; 600 CPU minutes were used; and 1 legal hour was used. What is the total cost of the Lane job using activity-based costing? $4,950

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