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Mdulo 6: Sistema de costo basado en actividad MULTIPLE CHOICE QUESTIONS AND EXERCISES I. Multiple Choice: Choose the correct answer by writing the appropriate letter in the space provided. Use the following information to answer questions 1-4. Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is: Mini A Maxi B Direct labor hours 15,000 25,000 Machine setups 600 400 Machine hours 24,000 26,000 Inspections 800 700 ______1. Overhead applied to Mini A using traditional costing using direct labor hours is a. $1,200,000. b. $1,536,000. c. $1,670,000. d. $1,920,000. ______2. Overhead applied to Maxi B using traditional costing using direct labor hours is a. $1,280,000. b. $1,536,000. c. $1,670,000. d. $2,000,000. ______3. Overhead applied to Mini A using activity-based costing is a. $1,200,000. b. $1,536,000. c. $1,664,000. d. $1,920,000. ______4. Overhead applied to Maxi B using activity-based costing is a. $1,280,000. b. $1,536,000. c. $1,664,000. d. $2,000,000. ______5. Hammock Company manufactures two models of its hammock, the Superior and the Deluxe. The Superior model requires 10,000 direct labor hours and the Deluxe requires 40,000 direct labor hours. The company produces 4,000 units of the Superior model and 1,000 units of the Deluxe model each year. The company produces the Superior model in batch sizes of 200, while it produces the Deluxe model in batch sizes of 100. The company expects to incur $120,000 of total setup costs this year. How much of the setup costs are allocated to the Superior model using ABC costing? a. b. c. d. $80,000 $60,000 $24,000 $100,000 ______6. Canterra Co. incurs $160,000 of overhead costs each year in its three main departments, setup ($10,000), machining ($110,000), and packing ($40,000). The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year. Information about Canterra's 2 products is as follows: Product One Number of setups Machining hours Orders packed 20 1,000 150 Product Two 20 4,000 350 If machining hours are used as a base, how much overhead is assigned to Product One each year? a. b. c. d. $32,000 $80,000 $55,000 $48,000 ______7. Canterra Co. incurs $160,000 of overhead costs each year in its three main departments, setup ($10,000), machining ($110,000), and packing ($40,000). The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year. Information about Canterra's 2 products is as follows: Product One Number of setups Machining hours Orders packed 20 1,000 150 Product Two 20 4,000 350 Using ABC, how much overhead is assigned to Product One each year? a. b. c. d. $80,000 $121,000 $32,000 $39,000 ______8. Canterra Co. incurs $160,000 of overhead costs each year in its three main departments, setup ($10,000), machining ($110,000), and packing ($40,000). The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year. Information about Canterra's 2 products is as follows: Product One Number of setups Machining hours Orders packed Number of products Manufactured Product Two 20 1,000 150 20 4,000 350 600 400 Using ABC, how much overhead is assigned to Product Two each year? a. $80,000 b. $64,000 c. $121,000 d. $128,000 EXERCISES II. Solve the following exercises. Show computations. 1. Boots and More, Inc. uses activity-based costing to assist management in setting prices for the company's 3 major product lines. The following information is available: Activity Cost Pool Cutting Stitching Inspections Packing Estimated Overhead $ 900,000 8,000,000 2,800,000 672,000 Expected Use of Cost Driver Per Activity 24,000 labor hours 320,000 machine hours 160,000 labor hours 64,000 finished goods units Instructions Compute the activity-based overhead rates. 2. All Wood Corporation manufactures dining chairs and tables. The following information is available: Dining Chairs Tables Total Cost Machine setups 200 600 $32,000 Inspections 250 500 $54,000 Labor hours 2,600 2,400 All Wood is considering switching from one overhead rate based on labor hours to activity-based costing. Instructions Perform the following analyses for these two components of overhead: a. Compute total machine setups and inspection costs assigned to each product, using a single overhead rate based on labor hours. b. Compute total machine setups and inspection costs assigned to each product, using activity-based costing. c. Comment on your findings. 3. A list of possible cost drivers is presented below: Code A Engineering hours B Setups C Machine hours Code D Number of subassemblies E Boxes F Orders Instructions For each of the following activity cost pools, select the most appropriate cost driver: Code Cost Pool _____ 1. Machine setup _____ 2. Ordering and receiving _____ 3. Packaging and shipping _____ 4. Engineering design _____ 5. Machining _____ 6. Assembly 4. Holiday Favorites manufactures a wide variety of holiday and seasonal decorative items. Holiday's activity-based costing overhead rates are: Purchasing Storing Machining Supervision $340 per order $2 per square foot/days $100 per machine hour $4 per direct labor hour The Haunted House Project involved three purchase orders, 4,000 square feet/days, 60 machine hours, and 30 direct labor hours. The cost of direct materials on the job was $17,000 and the direct labor rate is $30 per hour. Instructions Determine the total cost the Haunted House Project