Question

QUESTION 1

1. ABC Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two department: Assembly, and Sanding.

   The Assembly department uses a departmental overhead rate of $35 per machine hour.

   The Sanding department uses a departmental overhead rate of $20 per direct labor hour.

   Job 603 used the following Direct Labor Hours, and Machine Hours in the two departments:

   Actual Results Assembly Department Sanding Department

   Direct Labor Hours Used 8 5

   Machine Hours Used 10 7

   The cost of direct labor is $30 per direct labor hour, and the cost of direct materials used by Job 603 is $1,400.

   How much manufacturing overhead would be allocated to Job 603 using departmental overhead rates?

   	a.	$450
   	b.	$380
   	c.	$715
   	d.	$390

2 points   

QUESTION 2

1. ABC Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two department: Assembly, and Sanding. The Assembly department uses a departmental overhead rate of $35 per machine hour. The Sanding department uses a departmental overhead rate of $20 per direct labor hour. Job 603 used the following Direct Labor Hours, and Machine Hours in the two departments: Actual Results Assembly Department Sanding Department Direct Labor Hours Used 8 5 Machine Hours Used 10 7 The cost of direct labor is $30 per direct labor hour, and the cost of direct materials used by Job 603 is $1,400. How much manufacturing overhead would be allocated to Job 603 using departmental overhead rates? What was the TOTAL COST of Job 603 using departmental overhead rates to allocate manufacturing overhead?

   	a.	$1,850
   	b.	$2,240
   	c.	$1,790
   	d.	$2,170

3 points   

QUESTION 3

1. Swiss Furniture Company makes book shelves, and uses ABC to allocate all manufacturing costs.

   Activity   Estimated Costs Allocation Base Estimated Quantity of Allocation Base

   Materials Handling $6,400 Number of Parts 3,200 Parts

   Assembly $11,200 Number of Parts 3,200 Parts

   Packaging $2,240 Number of Book Shelves 800 Book Shelves

   Each Book Shelf consists of 4 parts and 1 package. The direct materials cost per book shelf is $30. What is the total manufacturing cost per book shelf?

   	a.	$22.00
   	b.	$54.80
   	c.	$52.00
   	d.	$24.80

3 points   

QUESTION 4

1. Total fixed costs for Taylor Incorp. are $240,000. Total costs, including both fixed and variable, are $500,000, if 125,000 units are produced. The variable cost per unit is:

   	a.	$1.92 per unit
   	b.	$2.08 per unit
   	c.	$4.00 per unit
   	d.	$5.92 per unit

2 points   

QUESTION 5

1. Great Calls has a special plan offer this month. There is a $3 per month charge each month, and calls anywhere in the U.S. are 4 cents per minute. What would the monthly cost be if you typically talk for 450 minutes per month?

   	a.	$21
   	b.	$5
   	c.	$18
   	d.	$15

2 points   

Answer 1

Answer 1:

Correct answer is:

a. $450

Explanation:

Manufacturing overhead allocated to Job 603:

Assembly department = Machine hours used * $35 per machine hour = 10 * $35 = $350

Sanding department = Direct labor hours used * $20 per direct labor hour. = 5 * $20 = $100

Manufacturing overhead allocated to Job 603 = $350 + $100 = $450

As such option a is correct and other options b, c and d are incorrect.

Answer 2:

Correct answer is:

b.$2,240

Explanation:

TOTAL COST of Job 603 = Direct material cost + Direct labor cost at Assembly department + Manufacturing overhead allocated at Assembly department + Direct labor cost at Sanding department + Manufacturing overhead allocated at Sanding department

= $1,400 + 8 * $30 + 10 * $35 + 5 * $30 + 5 * $20

= $2,240

TOTAL COST of Job 603 = $2,240

As such option b is correct and other options a, c and d are incorrect.

Answer 3:

Correct answer is:

b. $54.80

Explanation:

Cost driver rate calculation is as follows:

Each Book Shelf consists of 4 parts and 1 package. The direct materials cost per book shelf is $30.

Total manufacturing cost per book shelf = $30 + 4 * $2 + 4 * $3.50 + 1 * $2.80 = $54.80

As such option b is correct and other options a, c and d are incorrect.

Answer 4:

Correct answer is:

b. $2.08 per unit

Explanation:

Total costs, including both fixed and variable, are = $500,000

Fixed costs are = $240,000

Hence total variable cost = $500,000 - $240,000 = $260,000

Variable cost per unit = Total variable cost / Units produced = $260,000 / 125,000 = $2.08

As such option b is correct and other options a, c and d are incorrect.

Answer 5:

Correct answer is:

a. $21

Explanation:

There is a $3 per month charge each month, and calls anywhere in the U.S. are 4 cents per minute.

Monthly cost if you typically talk for 450 minutes per month = 450 * $0.04 + $3 = $21

As such option a is correct and other options b, c and d are incorrect.