ACC 202-Exam 1
Harrington Company has two products: A and B. The annual production and sales of Product A is 1,750 units and of Product B is 1,150 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.7 direct labor-hours per unit. The predetermined overhead rate is $66.00 per direct labor-hour. What it the amount of overhead cost that will be allocated to each unit of Product B?
$46.20
Implementing an activity-based costing system often results in a shift of overhead costs from:
high-volume to low-volume products.
Activity-based costing improves accuracy of product costs by:
using multiple-activity pools to accumulate overhead costs.
What is the predetermined overhead rate for the Packing Department? Assembly Packaging Direct labor-hours 5,200 62,000 Machine-hours 68,400 11,900 Total fixed manufacturing overhead cost $ 390,000 $ 419,000 Variable manufacturing overhead per DLH $ 3.75 Variable manufacturing overhead per MH $ 3.00
$10.51 per DLH Predetermined overhead rate = $651,500 ÷ 62,000 DLHs = $10.51 per DLH
What is the estimated total manufacturing overhead in the Assembly Department? Assembly Packaging Direct labor-hours 5,200 62,000 Machine-hours 68,400 11,900 Total fixed manufacturing overhead cost $ 390,000 $ 419,000 Variable manufacturing overhead per DLH $ 3.75 Variable manufacturing overhead per MH $ 3.00
$595,200 Estimated total manufacturing overhead = $390,000 + ($3.00 per DLH × 68,400 MHs) = $595,200
Helio Company has two products: A and B. The annual production and sales of Product A is 1,850 units and of Product B is 1,250 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labor-hours per unit and Product B requires 0.6 direct labor-hours per unit. The total estimated overhead for next period is $100,485. What is the company's predetermined overhead rate?
$77 (rounded to the nearest dollar)
Which of the following are part of the four-level hierarchy used in activity-based costing systems?
-Batch-level activities -Facility-level activities -Product-level activities -Unit-level activities
Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours?
4000, The predetermined overhead rate is $20 ($200,000 ÷ 10,000 DLHs). For 200 DLHs, the manufacturing overhead that would be applied is $4,000 ($20 × 200 DLHs).
In an activity-based costing system, the _____ expresses how much of the activity is carried out and is used as the allocation base for assigning overhead costs.
Activity Measure
Which of the following is a product-level activity?
Administering parts inventories
The direct materials required to manufacture each unit of product are listed on a ________.
Bill of Materials
Which of the following is a reason for the popularity of plantwide overhead rates to allocate overhead costs?
Simplicity
In the cost formula (Y = a + bX) that is used to estimate the total manufacturing overhead cost for a given period, the letter "a" refers to the estimated ________.
Total Fixed Manufacturing Overhead Cost
What is the term used when a company applies less overhead to production than it actually incurs?
Underapplied
Under an ABC system, overhead costs are allocated to the products using a two-stage process. What happens during the second stage of that process?
We allocate the costs in the activity pools to the products using activity rates and activity measures.
A normal cost system applies overhead to jobs ________.
by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job.
The adjustment for overapplied overhead ________.
decreases cost of goods sold and increases net operating income.
Activity-based management involves focusing on activities to:
eliminate waste, decrease processing time, and reduce defects.
Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200 respectively. If Job X23 used 100 direct labor-hours, what is the total cost assigned to this job?
$6,200
The management of Blue Ocean Company estimates that 50,000 machine-hours will be required to support the production planned for the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $4 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate?
$10.00 per machine-hour. First, the estimated total overhead cost = $300,000 + ($4 per MH x 50,000 MHs) = $500,000. Then, the predetermined overhead rate = estimated total overhead cost of $500,000 ÷ 50,000 MHs = $10 per MH.
Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200 respectively. If Job X23 used 100 direct labor-hours to produce 50 audio controllers, what is this job's unit product cost (per audio controller)?
$124
Expected Activity Activities and Activity Measures Estimated Overhead CostsProduct 1Product 2Hand-processing (direct labor-hours)$320,000 45,000 55,000 Setting up equipment (number of setups) 150,000 9,000 21,000 Administering parts inventories (number of part types) 30,000 110 90 $500,000 Transformation Corporation has provided the information set forth above regarding the overhead to be allocated between the two products it produces: CDE and EFG. What is the activity rate for the hand-processing units activity?
$3.20 per direct labor-hour
Companies can improve job cost accuracy by using ________.
multiple predetermined overhead rates
When all of a company's job cost sheets are viewed collectively they form what is known as a ________.
subsidiary ledger