Markham Company makes two products: Basic Product and Deluxe Product. Annual production and sales are 2,000 units of Basic Product and 1,400 units of Deluxe Product. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Basic Product requires 0.4 direct labor hours per unit and Deluxe Product requires 0.8 direct labor hours per unit. The total estimated overhead for next period is $99,285. 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: Activity Cost Pool Activity 1 Activity 2 General Factory Total Estimated Overhead Costs $30 648 17,535 51,102 $99,285 Expected Activity Deluxe Basic Product Product 1,400 700 2,000 300 800 1,120 Total 2.100 2,300 1,920 (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor hours.) The overhead cost per unit of Deluxe Product under the activity-based costing system is closest to: O $28.59. $43.17. $30.22 $21.29 Products X, Y, and Z are produced from the same process at a cost of $14,280. Five thousand pounds of raw material yields 3,300 X 4,300 Y, and 2,800 Z. Selling prices are: X $2 per unit, Y $4 per unit, Z valueless. The ending inventory of X is 86 units. What is the value of the ending inventory if joint costs are allocated using net realizable value? $103.20. $84.87. $105.20 $94.40. Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information: MXY Activity Production setups Material handling Packaging costs Cost Driver Number of setups Number of parts Number of units Amount $ 79,000 43,000 193,000 $ 315,000 6416 105,000 45,000 What is the total overhead per unit allocated to Product M using activity-based costing (ABC)? $2.10. $2.71. $2.71. $1.84. Actual machine hours Standard machine hours allowed Denominator activity (machine hours) Actual fixed overhead costs Budgeted fixed overhead costs Predetermined overhead rate $2 variable + $5 fixed) 865 950 1,015 4,300 5,075 $ $ What is the production volume variance? $775. $595. $325. O $425. Bonanza Co. manufactures products X and Y from a joint process that also yields a by-product, Z. Revenue from sales of Z is treated as a reduction of joint costs. Additional information is as follows: PRODUCTS 32.000 32,000 2 16.000 Units produced Joint costs Sales value at split-off TOTAL 80,000 $322,000 $736,000 $ 480,000 $ 240,000 $16.000 Joint costs were allocated using the net realizable value method at the split-off point. The joint costs allocated to product X were O $136,800. $204,000. $120,000 $240,000
