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Question 4 Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year: Cost Pools Budgeted Cost Cost Driver Cost

Question 4

Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year:

Cost Pools Budgeted Cost Cost Driver Cost Driver Level
Setup $ 170,000 Number of setups 850
Ordering 85,000 Number of orders 4,250
Maintenance 212,500 Machine hours 21,250
Power 42,500 Kilowatt hours 42,500

Total direct labor hours budgeted = 8,500 hours.

The following data applies to Product X, one of the products completed during the year.

Direct materials $ 4,250
Direct labor $ 5,100
Units completed 425
Direct labor hours 170
Number of setups 17
Number of orders 34
Machine hours 170
Kilowatt hours 425

If the activity-based cost drivers are used to allocate overhead cost, the total overhead cost of Product X will be:

Multiple Choice

  • $6,145.

  • $6,205.

  • $8,500.

  • $10,200.

  • $7,205.

Zeta Company is preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of manufacturing overhead that should be assigned to each of the two product lines from the information given below.

Wall Mirrors Specialty Windows
Total units produced 15 15
Total number of material moves 3 9
Direct labor hours per unit 105 105

Budgeted material-handling costs are $60,000.

The material-handling cost per wall mirror under ABC is:

Multiple Choice

  • $0.

  • $1,000.

  • $800.

  • $4,000.

  • $3,900.

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