Adelberg Company has two products: A and B. The annual production and sales of Product A is 2,000 units and of Product B is 1,400 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labor-hours per unit and Product B requires 0.6 direct labor-hours per unit. The total estimated overhead for next period is $102,175.

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 Order Size--with estimated overhead costs and expected activity as follows:

	Estimated		Expected Activity
Activity Cost Pools	Overhead Costs		Product A	Product B	Total
Activity 1	$	31,572	1,300	900	2,200
Activity 2		17,983	2,000	500	2,500
Order Size		52,620	600	840	1,440
Total	$	102,175

(Note: The Order Size 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:

rev: 03_25_2018_QC_CS-119201

Multiple Choice

• $7.19 per DLH

• $36.54 per DLH

• $70.95 per DLH

• $14.35 per DLH

2.

Adelberg Company has two products: A and B. The annual production and sales of Product A is 2,550 units and of Product B is 1,950 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.5 direct labor-hours per unit and Product B requires 0.8 direct labor-hours per unit. The total estimated overhead for next period is $108,200.

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 Order Size--with estimated overhead costs and expected activity as follows:

	Estimated		Expected Activity
Activity Cost Pools	Overhead Costs		Product A	Product B	Total
Activity 1	$	33,434	1,850	1,450	3,300
Activity 2		19,043	2,550	1,050	3,600
Order Size		55,723	1,275	1,560	2,835
Total	$	108,200

(Note: The Order Size activity cost pool's costs are allocated on the basis of direct labor-hours.)

The overhead cost per unit of Product B under the traditional costing system is closest to: (Round your intermediate calculations to 2 decimal places.)

rev: 03_25_2018_QC_CS-119201

Multiple Choice

• $18.07

• $5.29

• $7.47

• $30.54

3.

Adelberg Company has two products: A and B. The annual production and sales of Product A is 2,200 units and of Product B is 1,600 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.7 direct labor-hours per unit. The total estimated overhead for next period is $104,375.

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 Order Size--with estimated overhead costs and expected activity as follows:

	Estimated		Expected Activity
Activity Cost Pools	Overhead Costs		Product A	Product B	Total
Activity 1	$	32,252	1,500	1,100	2,600
Activity 2		18,370	2,200	700	2,900
Order Size		53,753	880	1,120	2,000
Total	$	104,375

(Note: The Order Size 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:

rev: 03_25_2018_QC_CS-119201

Multiple Choice

• $8.35

• $6.33

• $46.34

• $35.99

4.

Fleurant, Inc., manufactures and sells two products: Product W2 and Product P8. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:

	Expected Production	Direct Labor-Hours Per Unit	Total Direct Labor-Hours
Product W2	500	6	3,000
Product P8	600	5	3,000
Total direct labor-hours			6,000

The direct labor rate is $46.10 per DLH. The direct materials cost per unit is $212.60 for Product W2 and $149.30 for Product P8.

The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

		Estimated		Expected Activity
Activity Cost Pools	Activity Measures	Overhead Cost		Product W2	Product P8	Total
Labor-related	DLHs	$	227,576	3,000	3,000	6,000
Production orders	orders		19,438	570	470	1,040
Order size	MHs		262,986	3,970	3,770	7,740
		$	510,000

The overhead applied to each unit of Product W2 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

rev: 03_25_2018_QC_CS-119201

Multiple Choice

• $279.94 per unit

• $518.69 per unit

• $510.00 per unit

• $269.80 per unit

5.

Merone Company allocates materials handling cost to the company's two products using the below data:

	Modular Homes	Prefab Barns
Total expected units produced	6,000	9,000
Total expected material moves	600	200
Expected direct labor-hours per unit	800	300

The total materials handling cost for the year is expected to be $300,000.

If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the prefab barns is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• 200,000.00

• $105,000.00

• $150,204.00

• $108,000.00

6.

Merone Company allocates materials handling cost to the company's two products using the below data:

	Modular Homes	Prefab Barns
Total expected units produced	6,200	9,200
Total expected material moves	620	220
Expected direct labor-hours per unit	820	320

The total materials handling cost for the year is expected to be $321,120.

If the materials handling cost is allocated on the basis of material moves, the total materials handling cost allocated to the modular homes is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• $237,019.80

• $230,981.05

• $164,265.00

• $220,770.00