ACC 121- Chapter 18

The Aleutian Company produces two products, Rings and Dings. They are manufactured in two departments—Fabrication and Assembly. Data for the products and departments are listed below. ProductNumber ofunitsLabor hoursper unitMachine hoursper unitRings1,00046Dings2,00039 All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $90,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $105,000.The Aleutian Company uses departmental overhead rates. The Fabrication Department uses machine hours for an allocation base, and the Assembly Department uses labor hours.What is the Assembly Department overhead rate per labor hour?

$10.50 (1,000x4)+(2,000x3)=10,000 105,000/10,000=10.5

Which of the following is not a factory overhead allocation method?

factory costing

Which of the following are the two most common allocation bases for factory overhead?

Direct labor hours and machine hours

The Kaumajet Factory produces two products - table lamps and desk lamps. It has two separate departments - Finishing and Production. The overhead budget for the Finishing Department is $550,000, using 500,000 direct labor hours. The overhead budget for the Production Department is $400,000 using 80,000 direct labor hours.If the budget estimates that a desk lamp will require 1 hours of finishing and 2 hours of production, how much factory overhead will the Kaumajet Factory allocate to each unit of desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours?

$11.10 ((550,000/500,000x1)+(400,000/80,000x2))

Adirondak Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. Overhead Total Direct DLH per Product Labor Hours A B Painting Dept. $250,000 10,000 16 4 Finishing Dept. 75,000 12,000 4 16 Totals $325,000 22,000 20 20 Calculate the plantwide factory overhead rate for Adirondack Marketing Inc.

$14.77 per dlh (325,000/22,000)

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Activity CostActivity BaseProcurement$370,000Number of purchase ordersScheduling 250,000Number of production ordersMaterials handling500,000Number of movesProduct development730,000Number of engineering changesProduction1,500,000Machine hours Number ofPurchaseOrdersNumber ofProductionOrdersNumberofMovesNumber ofEngineeringChangesMachineHoursNumberofUnitsDisk drives4,0003001,400102,0002,000Tape drives4,000150800108,0004,000Wire drives12,0008004,0002510,0002,500 Determine the activity rate for procurement per purchase order.

$18.50 (370,000/20,000)

Question Content Area Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours. Overhead Direct LaborHours (dlh) Product A B Painting Dept.$248,000 10,000 dlh 16 dlh 4 dlh Finishing Dept. 72,000 10,000 4 16 Totals $320,000 20,000 dlh 20 dlh 20 dlh Determine the overhead in the Finishing Department for each unit of Product A if Blue Ridge Marketing Inc. uses a multiple department rate system.

$28.80 per unit ((72,000/20,000)x4)

Blackwelder Factory produces two similar products - small lamps and desk lamps. The total plant overhead budget is $640,000 with 400,000 estimated direct labor hours. It is further estimated that small lamp production will require 275,000 direct labor hours and desk lamp production will need 125,000 direct labor hours. Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Blackwelder Factory allocate to small lamp production if the actual direct hours for the period is 285,000?

$456,000 $640,000 overhead/ 400,000 dlh = 1.6 1.6 x Actual direct hours (285,000) = $456,000

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Activity Cost Activity BaseProcurement$364,200 Number of purchase ordersScheduling$210,100 Number of production ordersMaterials handling$489,800 Number of movesProduct development$702,900 Number of engineering changesProduction$1,525,000 Machine hours Number ofPurchaseOrdersNumber ofProductionOrdersNumberofMovesNumber ofEngineeringChangesMachineHoursNumberofUnitsDisk drives4,180 410 1,380 13 1,600 1,500 Tape drives1,900 205 780 6 8,000 4,400 Wire drives11,900 930 4,500 30 11,800 2,600 Determine the activity rate for production per machine hour.

$71.26 (1,525,000/(1,600+8,000+11,800))

Single Plantwide Factory Overhead Rate Nixon Machine Parts Inc.'s Fabrication Department incurred $198,000 of factory overhead cost in producing gears and sprockets. The two products consumed a total of 5,500 direct machine hours. Of that amount, sprockets consumed 2,100 direct machine hours. Determine the total amount of factory overhead that should be allocated to sprockets using machine hours as the allocation base. If required, round your answer to the nearest dollar.

$75,600 ((1980,000/5,500)x2,100)

The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. Product Number of Units Labor Hours Per Unit Machine Hours Per Unit Blinks 1,066 4 4 Dinks 1,906 2 6 All of the machine hours take place in the Fabrication department, which has an estimated overhead of $86,100. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $93,700. The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Blinks?

$89.04

Sterling Hotel uses activity-based costing to determine the cost of servicing customers. There are three activity pools: guest check-in, room cleaning, and meal service. The activity rates associated with each activity pool are $8 per guest check-in, $25 per room cleaning, and $4 per served meal (not including food). Ginny Campbell visited the hotel for a three-night stay. Campbell had three meals in the hotel during her visit. Determine the total activity-based cost for Campbell's visit.

$95 ($8+($25x3nights)+($4x3meals))

Atlas Enterprises Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: Activity Activity Rate Fabrication $29per machine hour Assembly $17per direct labor hour Setup $58per setup Inspecting $25per inspection Production scheduling $18per production order Purchasing $15per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 1,703 1,005 Direct labor hours 392 153 Setups 43 13 Inspections 615 369 Production orders 75 15 Purchase orders 171 104 Units produced 319 214 Use the activity rate and usage information to calculate the total activity cost and activity cost per unit for each product. If required, round the per unit answers to the nearest cent. Total Activity Cost Activity Cost Per Unit Elliptical Machines Treadmill

Total Activity Cost Activity Cost Per Unit Elliptical $77,835 $244 Treadmill $43,555 $203.53 (Activity-Base Usage for each activity x Activity Rate = Activity Cost; Add all activity costs for each product to obtain the total cost per product. Divide total costs by number of units to obtain activity cost per unit.)

Jungle Junior Company manufactures and sells outdoor play equipment. Jungle Junior uses activity-based costing to determine the cost of the sales order processing and the customer return activity. The sales order processing activity has an activity rate of $20 per sales order, and the customer return activity has an activity rate of $100 per return. Jungle Junior sold 2,500 swing sets, which consisted of 750 orders and 80 returns. a. Determine the total sales order processing and customer return activity cost for swing sets. b. Determine the per-unit sales order processing and customer return activity cost for swing sets. Round your answer to the nearest cent.

a. $23,000 (($20 per sales order x 750 orders)+( $100 per return x 80 returns)) b. $9.2 per unit ($23,000/ 2,500 sold swing sets)

Single Plantwide Factory Overhead Rate Mozart Music Inc. makes three musical instruments: trumpets, tubas, and trombones. The budgeted factory overhead cost is $126,140. Factory overhead is allocated to the three products on the basis of direct labor hours. The products have the following budgeted production volume and direct labor hours per unit: Budgeted Production Volume Direct Labor Hours Per Unit Trumpets 3,100units 0.5 Tubas 600 1.6 Trombones 1,200 1.0 If required, round all per unit answers to the nearest cent. a. Determine the single plantwide factory overhead rate. b. Use the factory overhead rate in (a) to determine the amount of total and per-unit factory overhead allocated to each of the three products. Total Factory Overhead Cost Per Unit Factory Overhead Cost Trumpets Tubas Trombones

a. $34 per direct labor hour (Budgeted production volume x direct labor hours per unit = direct labor hours per product. Add all product hours for total direct labor hours. Next: Total Budgeted Factory Overhead ÷ Total Budgeted Direct Labor Hours = Single Plantwide Factory Overhead Rate) ((3,100x0.5)+(600x1.6)+(1,200x1)=3710) (126,140/3,710) b. Trumpets: $52,700; 17 (3,100x0.5x34); (34x0.5) Tubas: $32,640; 54.4 (600x1.6x34); (34x1.6) Trombones: $40,800; 34 (1,200x1x34); (34x1)

The total factory overhead for Bardot Marine Company is budgeted for the year at $600,000. Bardot Marine manufactures two types of boats: speedboats and bass boats. The speedboat and bass boat each require 12 direct labor hours for manufacture. Each product is budgeted for 250 units of production for the year. a. Determine the total number of budgeted direct labor hours for the year. b. Determine the single plantwide factory overhead rate. c. Determine the factory overhead allocated per unit for each product using the single plantwide factory overhead rate.

a. 6,000 direct labor hours (12x250)x2(for both speedboat and bass boats) b. $100 per dlh (600,000/6,000) c. speedboat: $1,200 per unit ($100x12) bass boat: $1,200 per unit ($100x12)

The total factory overhead for Big Light Company is budgeted for the year at $1,356,480. Big Light manufactures two different products - night lights and desk lamps. Night lights is budgeted for 15,600 units. Each night light requires three hour of direct labor. Desk lamps is budgeted for 8,000 units. Each desk lamp requires two hours of direct labor. a Determine the total number of budgeted direct labor hours for year. b Determine the single plantwide factory overhead rate using direct labor hours as the allocation base. Round your answer to two decimal places, if necessary. c Determine the factory overhead allocated per unit for each product using the single plantwide factory overhead rate calculated in (b). Round your answers to two decimal places, if necessary. Night Lights per unit Desk Lamps per unit

a. 62,800 b. $21.6 c. Night Lamps $64.8 per unit Desk Lamps $43.2 per unit

The total factory overhead for Bardot Marine Company is budgeted for the year at $589,750, divided into two departments: Fabrication, $476,875, and Assembly, $112,875. Bardot Marine manufactures two types of boats: speedboats and bass boats. The speedboats require three direct labor hours in Fabrication and two direct labor hours in Assembly. The bass boats require two direct labor hours in Fabrication and one direct labor hour in Assembly. Each product is budgeted for 3,500 units of production for the year. When required, round all per unit answers to the nearest cent. a. Determine the total number of budgeted direct labor hours for the year in each department. b. Determine the departmental factory overhead rates for both departments. c. Determine the factory overhead allocated per unit for each product using the department factory overhead allocation rates.

a. Fabrication: 17,500 direct labor hours (3,500x5 dlh) Assembly: 10,500 direct labor hours (3,500x3 dlh) b. Fabrication: $27.25 per dlh ($476,875/17,500) Assembly: $10.75 per dlh ($112,875/10,500) c. Speedboat: $103.25 per unit ((27.25x3)+(10.75x2)) Bass boat: $65.25 per unit ((27.25x2)+(10.75x1))