Addy Company makes two products: Product A and Product B. Annual production and sales are 1,600 units of Product A and 1,200 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.20 direct labor hours per unit and Product B requires 0.70 direct labor hours per unit. The total estimated overhead for next period is $98,800. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools--Activity 1, Activity 2, and General Factory--with estimated overhead costs and expected activity as follows: Expected Activity Activity Cost Pool Estimated Overhead Costs Product A Product B Total Activity 1 $35,880 1,700 600 2,300 Activity 2 15,824 1,600 240 1,840 General Factory 47,096 480 720 1,200 Total $98,800 (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor hours.) The predetermined overhead rate under the traditional costing system is closest to: (Round your final answer to 2 decimal places.) -------------------------------------------------------------------------- The Muskego National Bank is considering either a bankwide overhead rate or department overhead rates to allocate $90,000 of indirect costs. The bankwide rate could be based on either direct labor hours (DLH) or the number of loans processed. The departmental rates would be based on direct labor hours for Consumer Loans and a dual rate based on direct labor hours and the number of loans processed for Commercial Loans. The following information was gathered for the upcoming period: Department DLH Loans Processed Direct Costs Consumer 5,000 300 $56,000 Commercial 2,000 100 $54,000 Management estimates that it costs $150 to analyze and close a commercial loan. What is the overhead rate if Muskego allocates the remaining indirect costs using direct labor hours? (Round your final answer to 2 decimal places.) -------------------------------------------------------------------------------------------------------- Smelly Perfume Company manufactures and distributes several different products. The company currently uses a plant wide allocation method for allocating overhead at a rate of $7 per direct labor hour. Cindy is the department manager of Department C which produces Products J and P. Department C has $15,600 in traceable overhead. Diane is the department manager of Department D which manufactures Product X. Department D has $12,150 in traceable overhead. The product costs (per case of 24 bottles) and other information are as follows: Products J P X Direct materials $180.00 $ 130.00 $86.00 Direct labor 76.00 56.70 22.00 Overhead 36.00 24.00 23.00 $292.00 $210.70 $131.00 Machine hours (per case) 4 2 3 Number of cases (per year) 300 500 600 If Smelly changes its allocation basis to machine hours, what is the total product cost per case for Product J? ------------------------------------------------- Addy Company makes two products: Product A and Product B. Annual production and sales are 1,800 units of Product A and 1,400 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.30 direct labor hours per unit and Product B requires 0.60 direct labor hours per unit. The total estimated overhead for next period is $115,688. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools--Activity 1, Activity 2, and General Factory--with estimated overhead costs and expected activity as follows: Expected Activity Activity Cost Pool Estimated Overhead Costs Product A Product B Total Activity 1 $41,080 1,900 700 2,600 Activity 2 18,304 1,800 280 2,080 General Factory 56,304 540 840 1,380 Total $115,688 (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor hours.) The predetermined overhead rate (i.e., activity rate) for Activity 2 under the activity-based costing system is closest to: ----------------------------------------------------------- A company has identified the following overhead costs and cost drivers for the coming year: Budgeted Overhead Item Cost Driver Budgeted Cost Activity Level Machine setup Number of setups $ 13,600 160 Inspection Number of inspections 90,300 4,300 Material handling Number of material moves 72,800 5,600 Engineering Engineering hours 14,000 560 Budgeted direct labor cost was $95,350 and budgeted direct material cost was $262,980. The following information was collected on three jobs that were completed during the year: Job 101 Job 102 Job 103 Direct materials $ 3,500 $ 8,500 $ 4,500 Direct labor $ 1,600 $ 1,600 $ 3,200 Units completed 50 25 150 Number of setups 1 2 2 Number of inspections 10 5 15 Number of material moves 15 5 40 Engineering hours 5 25 8 If the company uses activity-based costing (ABC), how much overhead cost should be assigned to Job 103

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