Question 3

Shaver Co. manufactures a variety of electric razors for men and women. The company's plant is partially automated. Listed below is cost driver information used in the product-costing system:

Overhead Cost Pool	Budgeted Overhead Cost			Budgeted Cost Driver Level		Cost Driver
Machinery depreciation/maintenance	$	170,646		25,800		Machine hours
Factory depreciation/utilities/insurance		121,890		25,800		Machine hours
Product design		585,072		36,000		Hours in design
Material handling		1,121,388		222,000		Pounds of raw materials

In addition, Shaver expects to spend $487,560 for 8,126 direct labor-hours. Two current product orders had the following requirements:

	Mens Razors			Womens Razors
Units produced and sold		18,000			22,000
Direct labor hours		20			30
Pounds of raw materials		822			712
Hours in design		10			13
Machine hours		63			48

What is the total manufacturing overhead assigned to the current order for Men's Razors if the firm uses a volume-based plant wide overhead rate based on direct labor dollars?

Multiple Choice

• $960.00.

• $7,749.00.

• $250.10.

• $4,920.00.

• $15,498.00.

Wang Company has established the following overhead cost pools and cost drivers for the month of May:

Cost Pool	Overhead Costs			Cost Driver Levels
Purchase orders	$	11,280			20	orders
Machine setups		49,000			100	setups
Electricity		30,000			30,000	kilowatt hours

The following information pertains to the actual consumption of activity resources for two sample jobs completed during May.

	Job M1		Job M2
Number of units produced	510		1,020
Number of purchase orders	15		10
Number of setups	25		10
Number of kilowatt hours	510		1,020

What is the activity-based overhead rate per purchase order?

Multiple Choice

• $579.

• $564.

• $549.

• $530.

• $510.