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Use the following for the next four questions. A company incurs $4,050,000 of overhead each year across three departments: Ordering and Receiving, Mixing, and Testing.
Use the following for the next four questions. A company incurs $4,050,000 of overhead each year across three departments: Ordering and Receiving, Mixing, and Testing. The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 design changes per year in producing 400,000 drums of product Goo and 200,000 drums of product Slime. The following data are available: Activity Cost Pools Estimated Use of Driver Cost Ordering and Receiving 2,000 $1,200,000 Mixing 50,000 1,500,000 Designing 1,500 1,350,000 Production information is as follows: Estimated Use of Driver Activity Cost Pools by Goo by Slime Ordering and Receiving 400 1,600 Mixing 30,000 20,000 Designing 500 1,000 12. If traditional costing with a plantwide overhead rate is used with mixing hours as the overhead allocation base, what amount of overhead will be assigned to Product Slime? A) $1,620,000 B) $2,430,000 C) $600,000 D) $3,240,000 13. If ABC is used, which of the above represent a product level activity? A) Ordering and receiving B) Mixing C) Designing D) none of the activity listed 14. If ABC is used, what amount of overhead will be assigned to Slime? A) $2,460,000 B) $1,590,000 C) $3,240,000 D) $2,025,000
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