Question 14

The following information pertains to Blaze Company:

Service Departments

Producing Departments

	Personnel	Maintenance	Fabrication	Assembly
Budgeted overhead	$160,000	$300,000	$280,000	$320,000
Direct labor-hours	2,000	2,500	8,000	10,000
Machine-hours			12,000	8,000
Number of employees	4	5	15	25

Blaze Company does not divide costs into fixed and variable components. Personnel costs are allocated based on the number of employees, and maintenance costs are allocated based on machine-hours. Predetermined overhead rates for Fabrication and Assembly are based on direct labor-hours (round amounts to dollars). If the direct method is used to allocate service department costs, the predetermined overhead rate for the Fabrication Department (rounded to 2 decimal places) would be:

	A.	$64.10
	B.	$69.55
	C.	$65.00
	D.	$42.00

Premier Painting Services, Inc. provides residential painting services for three home building companies, Glendale, Highwood, and Lexington, and it uses a job costing system for determining the costs for completing each job. The job cost system does not capture any cost incurred by Premier for return touch-ups and refinishes after the homeowner occupies the home. Premier paints each house on a square footage contract price, which includes painting as well as all refinishes and touch-ups required after the homes are occupied. Each year, the company generates about one-third of its total revenues and gross profits from each of the three builders. The Premier owner has observed that the builders, however, require substantially different levels of support following the completion of jobs. The following data have been gathered

Support Activity	Driver	Cost per Driver Unit
Major refinishes	Hours on jobs	$40
Touch-ups	Number of visits	$60
Communication	Number of calls	$12

Builder	Major Refinishes	Touch-ups	Communication
Glendale	70	125	39
Highwood	125	105	180
Lexington	305	180	175

Assume that each of the three customers produces Gross Profit of $50,000. The profitability from each builder after taking into account the support activity required for each builder is:

	A.	$40,140 Glendale, $35,540 Highwood, $36,540 Lexington
	B.	$36,040 Glendale, $40,140 Highwood, $35,540 Lexington
	C.	$35,540 Glendale, $40,140 Highwood, $36,040 Lexington
	D.	$40,000 Glendale, $65,000 Highwood, $38,000 Lexington