Question
Krypton Ltd.s budgeted information relating to the manufacture of two of its products is presented below: # of times driver used Activity Cost Driver Product
Krypton Ltd.s budgeted information relating to the manufacture of two of its products is presented below:
|
|
| # of times driver used | |
Activity | Cost | Driver | Product A | Product B |
Setup | $56501 | # of batches | 30 | 10 |
Engineering | $121204 | # of engineering hours | 6657 | 9224 |
Machine Maintenance | $89140 | # of machine hours | 7000 | 12000 |
| ||||
Direct labour cost | $11/hour |
| $352180 | $528909 |
Direct materials |
|
| $126718 | $96026 |
What would be the pre-determined overhead rate under a traditional costing model, with overhead allocated based on direct labour hours?
Select one:
a. $0.30
b. $1.20
c. $16.80
d. $3.33
Waymire Ltd. currently uses a traditional costing system based on direct labour hours to allocate overhead. This year, the company has budgeted to produce 1602 units of one of its products. Each unit requires 3 hours of direct labour.
For the coming year, the company is considering changing to an activity based costing system by allocating overhead based on 3 activities. The following are the activities, budgeted total cost and cost drivers per activity for the upcoming year:
Activity | Cost driver | Cost | Cost Base Volume |
Processing | machine hours | $866307 | 20619 |
Assembly | direct labour hours | $414317 | 114556 |
Inspection | # of inspections | $700768 | 40869 |
Waymire Ltd. has estimated the consumption of each of the activities for this product: 1988 machine hours and 2987 inspections.
What is the products overhead cost per unit if Waymire continues to allocate overhead using the current costing system?
Select one:
a. $94.96
b. $10.85
c. $51.89
d. $17.30
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