Question 1 Assume that the accounts payable department of a company has 5 clerks each one is paid $25,000 per year ($125,000 total clerical salaries) On average, the clerks spend 20 of their time on processing payments 30 of their time matching invoices, receiving documents, and billing statement 50 of their time correcting errors in the various documents In addition, long distance telephone costs of $1,700 are directly traced to the activity correcting errors Required A Assign the clerical salary cost to each of the three activities Processing payments $ Matching documents $ Correcting errors $ B What is the total cost of the correcting errors activity $ Question 2 Heedy Company makes a product using two departments Department 1 and Department 2 Information on these departments is as follows Department 1 Department 2 Direct labor hours 10,000 90,000 Machine hours 40,000 10,000 Overhead cost $240,000 $180,000 Required A Calculate the department overhead rate for each department Use machine hours as the base in Department 1 and direct labor hours as the base in Department 2 Department 1 overhead rate $ per machine hour Department 2 overhead rate $ per direct labor hour B A job has prime cost of $270 It uses 10 machine hours in Department 1 and 15 direct labor hours in Department 2 Calculate the total product cost for the job $ C Recalculate the department overhead rate for each department Use direct labor hours as the base in Department 1 and machine hours as the base in Department 2 Department 1 overhead rate $ per direct labor hour Department 2 overhead rate $ per machine hour D A job has prime cost of $270 It uses 10 direct labor hours in Department 1 and 15 machine hours in Department 2 Using the rates calculated in part C, calculate the total product cost for the job $

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Question 1 Assume that the accounts payable department of a company has 5 clerks; each one is paid $25,000 per year ($125,000 total clerical salaries).

Question 1

Assume that the accounts payable department of a company has 5 clerks; each one is paid $25,000 per year ($125,000 total clerical salaries). On average, the clerks spend:

20% of their time on processing payments 30% of their time matching invoices, receiving documents, and billing statement 50% of their time correcting errors in the various documents

In addition, long distance telephone costs of $1,700 are directly traced to the activity "correcting errors."

Required:

A. Assign the clerical salary cost to each of the three activities.

Processing payments	$
Matching documents	$
Correcting errors	$

B. What is the total cost of the "correcting errors" activity? $

Question 2

Heedy Company makes a product using two departments - Department 1 and Department 2. Information on these departments is as follows:

	Department 1	Department 2
Direct labor hours	10,000	90,000
Machine hours	40,000	10,000
Overhead cost	$240,000	$180,000

Required:

A. Calculate the department overhead rate for each department. Use machine hours as the base in Department 1 and direct labor hours as the base in Department 2.

Department 1 overhead rate	$ per machine hour
Department 2 overhead rate	$ per direct labor hour

B. A job has prime cost of $270. It uses 10 machine hours in Department 1 and 15 direct labor hours in Department 2. Calculate the total product cost for the job. $

C. Recalculate the department overhead rate for each department. Use direct labor hours as the base in Department 1 and machine hours as the base in Department 2.

Department 1 overhead rate	$ per direct labor hour
Department 2 overhead rate	$ per machine hour

D. A job has prime cost of $270. It uses 10 direct labor hours in Department 1 and 15 machine hours in Department 2. Using the rates calculated in part C, calculate the total product cost for the job. $