Any assistance would be great please Draus Products Company uses activity based costing to compute product costs for external reports The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool Estimated costs and activities for the current year are presented below for the three activity cost pools Estimated Overhead Cost Expected Activity Activity 1 $60,048 4,800 Activity 2 $58,656 2,400 Activity 3 $130,324 4,400 Actual costs and activities for the current year were as follows Actual Overhead Cost Actual Activity Activity 1 $59,798 4,830 Activity 2 $58,476 2,370 Activity 3 $130,234 4,450 The total amount of overhead applied during the year was closest to A $248,508 B $248,988 C $250,155 D $251,334 QUESTION 2 When there are batch level or product level costs, in comparison to a traditional cost system, an activity based costing system ordinarily will shift costs from A high volume to low volume products B low volume to high volume products C specialized to standardized products D standardized to specialized products QUESTION 3 All of the following are examples of product level activities except A advertising a product B human resource management C parts administration D testing a prototype of a new product QUESTION 4 Chibucos Company has two products A and B The annual production and sales level of Product A is 9,094 units The annual production and sales level of Product B is 15,826 The company uses activity based costing and has prepared the following analysis showing the estimated total cost and expected activity for each of its three activity cost pools Activity Car Pool Estimated Overhead Cost Expected Activity Total Product A Product B 1 $29 200 1 000 500 1,500 2 $40,000 200 800 1,000 3 $180,000 600 5,400 6,000 The overhead cost per unit of Product A under activity based costing is closest to A $1 83 B $1 98 C $5 00 D $10 00 QUESTION 5 All of the following are examples of batch level activities except A clerical activity associated with processing purchase orders to produce an order for a standard product B purchase order processing C setting up equipment D worker recreational facilities QUESTION 6 JimBob Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs The company has two departments assembly and sanding The assembly department uses a departmental overhead rate of $35 per machine hour, while the sanding department uses a departmental overhead rate of $20 per direct labor hour Job 603 used the following direct labor hours and machine hours in the two departments Actual results Assembly Department Sanding Department Direct labor hours used 8 5 Machine hours used 10 7 The cost for direct labor is $30 per direct labor hour, and the cost of the direct materials used by Job 603 is $1,400 How much manufacturing overhead would be allocated to Job 603 using the departmental overhead rates A $450 B $380 C $715 D $390 QUESTION 7 When a company has established separate manufacturing overhead rates for each department, it is using A departmental overhead rates B cost distortion C a plant wide overhead rate D lean thinking QUESTION 8 HammerTime Manufacturing manufactures small parts and uses an activity based costing system Activity Est Indirect Activity Costs Allocation Base Cost Allocation Rate Materials $75,000 Material moves $3 00 move Assembling $255,000 Direct labor hours $10 00 dir labor hour Packaging $90,000 of finished units $1 00 finished unit The following parts were produced in October with the following information Part Produced Materials Costs Moves Dir Labor Hrs A 2,500 $3,000 900 250 B 4,000 $6,500 1700 325 C 4,750 $9,000 2500 1500 Total manufacturing costs for part C is A $27,250 B $31,500 C $36,250 D $22,500 QUESTION 9 Bearington Enterprises uses an activity based costing system to assign costs in its auto parts division Activity Est Indirect Activty Costs Allocation BaseActivity Cost Allocation Rate Materials $60,000 Materials moves $5 00 move Assembling $175,000 Direct labor hours $5 00 dir labor hour Packaging $70,000 of finished units $2 50 finished unit The following units were produced in December with the following information Part Produced Materials Costs Moves Dir Labor Hours Part 001 1250 $2500 100 200 Part 002 3500 $6000 500 300 Part 003 3750 $7000 2500 1250 Total unit cost for Part 002 is closest to (rounded) A $5 36 B $5 70 C $9 37 D $3 64 QUESTION 10 Draus Products Company uses activity based costing to compute product costs for external reports The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool Estimated costs and activities for the current year are presented below for the three activity cost pools Estimated Overhead Cost Expected Activity Activity 1 $60,048 4,800 Activity 2 $58,656 2,400 Activity 3 $130,324 4,400 Actual costs and activities for the current year were as follows Actual Overhead Cost Actual Activity Activity 1 $59,798 4,830 Activity 2 $58,476 2,370 Activity 3 $130,234 4,450 The total amount of the debits to the manufacturing overhead during the year was closest to A $248,508 B $248,988 C $250,334 D $251,110 QUESTION 11 Davis Bell Corporation has an activity based costing system with three activity cost pools Machining, Setting Up, and Other The company's overhead costs have already been allocated to the cost pools and total $5,800 for the Machining cost pool, $4,700 for the Setting Up cost pool, and $7,500 for the Other cost pool Costs in the machining cost pool are assigned to products based on machine hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches Costs in the Other cost pool are not assigned to products Data concerning the two products are below MHs Batches Product Z7 3,800 700 Product K9 6,200 300 Total 10,000 1,000 Calculate activity rates for each activity cost pool using activity based costing Determine the amount of overhead cost that would be assigned to each product using activity based costing QUESTION 12 Company XYZ has two fixed price contracts for two different clients The company has enough capacity for both contracts but is uncertain whether they will be profitable Data as follows Customer AAA BBB Component Type A999 B999 Contract Value($) $27,000 $100,000 Contract Quantity 1,000 unit 2,000 Material cost unit $15 $20 Molding time batch 5 hours 7 5 Batch size 100 units 50 units Annual Budgeted overheads as follows Activity Cost Driver Cost Driver volume year Cost pool Molding Molding hours 2000 $150000 Inspection Batches 150 $75000 Production mgmt Contracts 20 $125000 Required Calculate the activity based costs and profits for each contract There is not a word length requirement for this question however, you must show your work QUESTION 13 Bell Products Corporation manufactures after market clutch plates for motorcycles, automobiles, racing applications, and heavy industry vehicles One of the first stages of clutch plate production is to stamp the raw plates out of rolls of metal The process requires the use of 100 ton presses that stamp out hundreds of plates per minute A chemical is used to keep the presses from overheating and is automatically sprayed in fractions of seconds to keep the press operating smoothly to lubricate and prepare the metal The chemical also keeps the press from sparking during the punching process A small spark could cause a fire and safety hazard Therefore, the chemical is crucial to the operation of the stamping process The stamping solution contains proprietary ingredients that are toxic and considered to be hazardous waste, and disposal must be through EPA approved methods The cost to dispose of the chemical is many times greater than regular waste products Currently, Bell Products uses a traditional, volume based costing system for its clutch plate products Total manufacturing overhead for the period is allocated to the clutch plates based on machine hours Fred, who was recently hired, is the controller for Bell Products He has five years of experience as a cost accountant at a lumber manufacturing facility At the lumber plant, Fred implemented an activity based costing system that helped the plant manager determine the profitability of various product lines After getting to know the manufacturing process at Bell Products, Fred has determined that an activity based costing system would help management make better decisions and track the costs of the clutch plates more accurately Tina is the manager of the stamping department and is good friends with Fred Tina runs a very efficient department and has earned several bonuses for the stamping department's production and profitability Each of the department managers are evaluated based on the profitability of the departments based on internal cost reports If activity based costing is used to allocate costs and the hazardous waste of the stamping chemical is allocated to the department that uses the product, the internally calculated profits of the stamping department would decline drastically The decline in profitability would be due to the extreme high cost of the stamping chemical and this cost would be directed allocated to the stamping department Tina decides to take Fred to an expensive restaurant and eventually brings up the activity based costing system She voices her concern about the allocation of the hazardous waste being directly allocated to her department She asks Fred if there is any way that he could reduce the amount of hazardous waste allocated to the stamping department Fred values Tina's friendship and realizes that she is on the compensation committee that evaluates Fred on an annual basis Fred definitely wants to keep Tina happy and on his side As a result, Fred decides to not setup a cost pool for hazardous waste He reasons that since the hazardous waste has always been a part of the manufacturing process, he will bury it as part of the manufacturing costs that are allocated across all departments He justifies his decision because the activity based system will still accurately allocate all other costs and it is much more accurate than the old traditional costing system Fred feels no one will get hurt Since the activity based costing cannot be used for external reporting, Fred feels that his decision is not illegal Using the Institute of Management Accountants Statement of Ethical Professional Practice on page 13 of your textbook (Exhibit 1 7) as an ethical framework, answer the following questions What are the ethical issues in this case Activity based costing cannot be used for external reporting Does this fact influence your analysis of whether Fred has violated any ethical principles Why, or why not Do you agree with Fred that no one will get hurt by burying the hazardous waste into the general manufacturing cost pool shared by all departments Explain What are Fred's responsibilities as a management accountant What should he do now

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Any assistance would be great please: Draus Products Company uses activity-based costing to compute product costs for external reports. The company has three activity cost

Any assistance would be great please:

Draus Products Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Estimated costs and activities for the current year are presented below for the three activity cost pools:

	Estimated Overhead Cost	Expected Activity
Activity #1	$60,048	4,800
Activity #2	$58,656	2,400
Activity #3	$130,324	4,400

Actual costs and activities for the current year were as follows.

	Actual Overhead Cost	Actual Activity
Activity #1	$59,798	4,830
Activity #2	$58,476	2,370
Activity #3	$130,234	4,450

The total amount of overhead applied during the year was closest to:

A		$248,508.
B		$248,988.
C		$250,155.
D		$251,334.

QUESTION 2

When there are batch-level or product-level costs, in comparison to a traditional cost system, an activity-based costing system ordinarily will shift costs from:

A		high-volume to low-volume products.
B		low-volume to high-volume products.
C		specialized to standardized products.
D		standardized to specialized products.

QUESTION 3

All of the following are examples of product-level activities except:

A		advertising a product.
B		human resource management.
C		parts administration.
D		testing a prototype of a new product.

QUESTION 4

Chibucos Company has two products: A and B. The annual production and sales level of Product A is 9,094 units. The annual production and sales level of Product B is 15,826. The company uses activity-based costing and has prepared the following analysis showing the estimated total cost and expected activity for each of its three activity cost pools.

Activity Car Pool	Estimated Overhead Cost	Expected Activity	Total
Product A	Product B
# 1	$29.200	1.000	500	1,500
# 2	$40,000	200	800	1,000
# 3	$180,000	600	5,400	6,000

The overhead cost per unit of Product A under activity-based costing is closest to:

A		$1.83.
B		$1.98.
C		$5.00.
D		$10.00.

QUESTION 5

All of the following are examples of batch-level activities except:

A		clerical activity associated with processing purchase orders to produce an order for a standard product.
B		purchase order processing.
C		setting up equipment.
D		worker recreational facilities.

QUESTION 6

JimBob Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: assembly and sanding. The assembly department uses a departmental overhead rate of $35 per machine hour, while the sanding department uses a departmental overhead rate of $20 per direct labor hour. Job 603 used the following direct labor hours and machine hours in the two departments:

Actual results	Assembly Department	Sanding Department
Direct labor hours used	8	5
Machine hours used	10	7

The cost for direct labor is $30 per direct labor hour, and the cost of the direct materials used by Job 603 is $1,400.

How much manufacturing overhead would be allocated to Job 603 using the departmental overhead rates?

A		$450
B		$380
C		$715
D		$390

QUESTION 7

When a company has established separate manufacturing overhead rates for each department, it is using:

A		departmental overhead rates.
B		cost distortion.
C		a plant-wide overhead rate.
D		lean thinking.

QUESTION 8

HammerTime Manufacturing manufactures small parts and uses an activity-based costing system.

Activity	Est. Indirect Activity Costs	Allocation Base	Cost Allocation Rate
Materials	$75,000	Material moves	$3.00/move
Assembling	$255,000	Direct labor hours	$10.00/dir. labor hour
Packaging	$90,000	# of finished units	$1.00/finished unit

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

Part	# Produced	Materials Costs	# Moves	Dir. Labor Hrs.
A	2,500	$3,000	900	250
B	4,000	$6,500	1700	325
C	4,750	$9,000	2500	1500

Total manufacturing costs for part C is:

A		$27,250.
B		$31,500.
C		$36,250.
D		$22,500.

QUESTION 9

Bearington Enterprises uses an activity-based costing system to assign costs in its auto-parts division.

Activity	Est. Indirect Activty Costs	Allocation BaseActivity	Cost Allocation Rate
Materials	$60,000	Materials moves	$5.00/move
Assembling	$175,000	Direct labor hours	$5.00/dir. labor hour
Packaging	$70,000	# of finished units	$2.50/finished unit

The following units were produced in December with the following information:

Part #	# Produced	Materials Costs	# Moves	Dir. Labor Hours
Part 001	1250	$2500	100	200
Part 002	3500	$6000	500	300
Part 003	3750	$7000	2500	1250

Total unit cost for Part 002 is closest to (rounded):

A		$5.36.
B		$5.70.
C		$9.37.
D		$3.64.

QUESTION 10

Draus Products Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Estimated costs and activities for the current year are presented below for the three activity cost pools.

	Estimated Overhead Cost	Expected Activity
Activity #1	$60,048	4,800
Activity #2	$58,656	2,400
Activity #3	$130,324	4,400

Actual costs and activities for the current year were as follows.

	Actual Overhead Cost	Actual Activity
Activity #1	$59,798	4,830
Activity #2	$58,476	2,370
Activity #3	$130,234	4,450

The total amount of the debits to the manufacturing overhead during the year was closest to:

A		$248,508.
B		$248,988.
C		$250,334.
D		$251,110.

QUESTION 11

Davis-Bell Corporation has an activity-based costing system with three activity cost pools - Machining, Setting Up, and Other. The company's overhead costs have already been allocated to the cost pools and total $5,800 for the Machining cost pool, $4,700 for the Setting Up cost pool, and $7,500 for the Other cost pool. Costs in the machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products are below:

	MHs	Batches
Product Z7	3,800	700
Product K9	6,200	300
Total	10,000	1,000

Calculate activity rates for each activity cost pool using activity-based costing.
Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

QUESTION 12

Company XYZ has two fixed price contracts for two different clients. The company has enough capacity for both contracts but is uncertain whether they will be profitable. Data as follows:

Customer	AAA	BBB
Component Type	A999	B999
Contract Value($)	$27,000	$100,000
Contract Quantity	1,000 unit	2,000
Material cost/unit	$15	$20
Molding time/batch	5 hours	7.5
Batch size	100 units	50 units

Annual Budgeted overheads as follows:

Activity	Cost Driver	Cost Driver volume/year	Cost pool
Molding	Molding hours	2000	$150000
Inspection	Batches	150	$75000
Production mgmt	Contracts	20	$125000

Required:

Calculate the activity-based costs and profits for each contract.

There is not a word length requirement for this question; however, you must show your work.

QUESTION 13

Bell Products Corporation manufactures after-market clutch plates for motorcycles, automobiles, racing applications, and heavy industry vehicles. One of the first stages of clutch plate production is to stamp the raw plates out of rolls of metal. The process requires the use of 100 ton presses that stamp out hundreds of plates per minute. A chemical is used to keep the presses from overheating and is automatically sprayed in fractions of seconds to keep the press operating smoothly to lubricate and prepare the metal. The chemical also keeps the press from sparking during the punching process. A small spark could cause a fire and safety hazard. Therefore, the chemical is crucial to the operation of the stamping process. The stamping solution contains proprietary ingredients that are toxic and considered to be hazardous waste, and disposal must be through EPA approved methods. The cost to dispose of the chemical is many times greater than regular waste products. Currently, Bell Products uses a traditional, volume-based costing system for its clutch plate products. Total manufacturing overhead for the period is allocated to the clutch plates based on machine hours. Fred, who was recently hired, is the controller for Bell Products. He has five years of experience as a cost accountant at a lumber manufacturing facility. At the lumber plant, Fred implemented an activity-based costing system that helped the plant manager determine the profitability of various product lines. After getting to know the manufacturing process at Bell Products, Fred has determined that an activity-based costing system would help management make better decisions and track the costs of the clutch plates more accurately. Tina is the manager of the stamping department and is good friends with Fred. Tina runs a very efficient department and has earned several bonuses for the stamping department's production and profitability. Each of the department managers are evaluated based on the profitability of the departments based on internal cost reports. If activity-based costing is used to allocate costs and the hazardous waste of the stamping chemical is allocated to the department that uses the product, the internally calculated profits of the stamping department would decline drastically. The decline in profitability would be due to the extreme high cost of the stamping chemical and this cost would be directed allocated to the stamping department. Tina decides to take Fred to an expensive restaurant and eventually brings up the activity-based costing system. She voices her concern about the allocation of the hazardous waste being directly allocated to her department. She asks Fred if there is any way that he could reduce the amount of hazardous waste allocated to the stamping department. Fred values Tina's friendship and realizes that she is on the compensation committee that evaluates Fred on an annual basis. Fred definitely wants to keep Tina happy and on his side. As a result, Fred decides to not setup a cost pool for hazardous waste. He reasons that since the hazardous waste has always been a part of the manufacturing process, he will bury it as part of the manufacturing costs that are allocated across all departments. He justifies his decision because the activity-based system will still accurately allocate all other costs and it is much more accurate than the old traditional costing system. Fred feels no one will get hurt. Since the activity-based costing cannot be used for external reporting, Fred feels that his decision is not illegal. Using the Institute of Management Accountants Statement of Ethical Professional Practice on page 13 of your textbook (Exhibit 1-7) as an ethical framework, answer the following questions:
1. What are the ethical issues in this case?
2. Activity-based costing cannot be used for external reporting. Does this fact influence your analysis of whether Fred has violated any ethical principles? Why, or why not?
3. Do you agree with Fred that no one will get hurt by burying the hazardous waste into the general manufacturing cost pool shared by all departments? Explain.
4. What are Fred's responsibilities as a management accountant? What should he do now?