Question

Explanation not necessary Active Frame, Inc., manufactures clear and tinted sport glasses. The manufacturing of clear glasses takes 45,000 direct labor hours and involves 1 700 parts and 115 inspections. The manufacturing of tinted glasses takes 115,000 direct labor hours and involves 1,400 parts and 450 inspections. The traditional method applies $560,000 of overhead on the basis of direct labor hours. What is the amount of overhead per direct labor hour applied to the clear glass products? A $933.33 B. $157,500 C. $402.500 D. $322.500 Which statement is correct? A Activity-based cost systems provide the same data as traditional cost systems B. Activity-based cost systems are more accurate than traditional cost systems. C. Activity-based cost systems are less costly than traditional cost systems D. Activity-based cost systems are easier to implement than traditional cost systems Product costs under variable costing are typically: A the same as with absorption costing B. higher than under absorption costing C. lower than under absorption costing D. higher than absorption costing when inventory increases What is the proper order of tasks in an ABC system? A identify the cost drivers, identify the cost pools, calculate the overhead application rate for each cost pool, assign the costs to the products B. identify the cost drivers, assign the costs to the products, calculate the overhead application rate for each cost pool, identify the cost pools C. assign the costs to the products, identify the cost drivers, calculate the overhead application rate for each cost pool, identify the cost pools D. identify the cost pools, identify the cost drivers, calculate the overhead application rate for each cost pool, assign the costs to the products

Answer 1

Solution 1:

Amount of overhead applied to Clear glass product = Total overhead *DLH of clear glass product / Total DLH

= $560,000 * 45000 / 160000 = $157,500

Hence option B is correct.

Solution 2:

The true statement is "Activity based costing provides most accurate data than traditional costing system"

Hence option B is correct.

Solution 3:

Product cost under variable costing are typically lower than under absorption costing because variable costing excludes fixed manufacturing overhead as product cost.

Hence option C is correct.

Solution 4:

Proper order of task in an ABC system is "Identify the costs pools, identify the cost drivers, calculate the overhead application rate for each cost pool, assign the costs to the products.

Hence option D is correct.