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Question 3 X Company produces many different products within the same manufacturing plant. It currently uses a single driver, plantwide allocation system to allocate its

Question 3 X Company produces many different products within the same manufacturing plant. It currently uses a single driver, plantwide allocation system to allocate its overhead, with direct labor hours as the most appropriate cost driver. Estimated direct labor hours for 2015 are 90,000; estimated overhead is $168,000.

Assume the following information for one of its products, Product 1, in 2015:

Direct materials $67,600
Direct labor $15,552
Direct labor hours 972
Machine hours 1,850

3. Using the single driver system, allocate overhead to Product 1 (round overhead rate(s) to two decimal places).

Question 4 Assume that X Company has decided to switch to a departmental allocation system. It has two departments, and will use direct labor hours as the cost driver in Department 1 and machine hours as the cost driver in Department 2. The following are budgeted costs and driver amounts for these two departments in 2015:

Department 1 Department 2
Overhead $110,000 $58,000
Direct labor $640,000 $800,000
Direct labor hours 40,000 50,000
Machine hours 110,000 140,000

Assume the following information for Product 1 in 2015:

Department 1 Department 2
Direct labor $12,176 $3,376
Direct labor hours 761 211
Machine hours 1,030 820

4. Using the departmental system, allocate overhead to Product 1 (round overhead rate(s) to two decimal places).

Question 5 Assume that X Company has decided to switch to an activity-based costing allocation system. It has identified three activities with the following budgeted costs and cost drivers for 2015:

Activity Budgeted cost Cost driver
Purchasing $33,600 4,600 purchase orders
Assembly $84,000 89,200 parts
Packaging $50,400 11,500 finished units

5. Assume that 569 unis of Product 1 were finished in 2015, requiring 1,274 parts and 42 purchase orders. Using the activity-based costing system, allocate overhead to Product 1 (round overhead rate(s) to two decimal places).

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