Question

Olmo, Inc., manufactures and sells two products: Product K0 and Product H9. The annual production and sales of Product of K0 is 1,100 units and of Product H9 is 1,100 units. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

Activity Cost Pools	Activity Measures	Estimated Overhead Cost			Expected Activity
					Product K0	Product H9	Total
Labor-related	DLHs	$	551,008		8,800	4,400	13,200
Production orders	orders		54,019		1,200	200	1,400
Order size	MHs		836,616		3,500	2,700	6,200
		$	1,441,643

The overhead applied to each unit of Product K0 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• $333.92 per unit

• $805.37 per unit

• $429.35 per unit

• $327.64 per unit

Merone Company allocates materials handling cost to the company's two products using the below data:

Modular Homes	Prefab Barns
Total expected units produced	5,100	8,100
Total expected material moves	510	110
Expected direct labor-hours per unit	710	210

The total materials handling cost for the year is expected to be $266,100.

If the materials handling cost is allocated on the basis of material moves, the total materials handling cost allocated to the modular homes is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• $218,886.90

• $205,359.78

• $115,894.00

• $139,386.00

Doles Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products.

Activity Cost Pools	Activity Rate
Setting up batches	$	70.62		per batch
Processing customer orders	$	27.68		per customer order
Assembling products	$	12.81		per assembly hour

Data concerning two products appear below:

Product K52W	Product X94T
Number of batches	68	55
Number of customer orders	48	33
Number of assembly hours	421	164

Required:

How much overhead cost would be assigned to each of the two products using the company's activity-based costing system? (Round your intermediate calculations and final answers to 2 decimal places.)

Total Overhead Cost: Product K52W and Product X94T

Answer 1

Question 1

Correct answer----------$805.37

Working

Cost assigned to Ko
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Labor related	$                     41.74	8800.00	$     367,312.00
Production orders	$                     38.59	1200	$       46,308.00
Order size	$                   134.94	3500	$     472,290.00
Total Overheads assigned			$     885,910.00
Production			1,100.00
Overhead cost per unit			$ 805.37

Calculation of Activity rates
Activity Cost Pool	Activity driver	Overhead Cost (A)	Expected Activity (B)	Activity rate (A/B)
Labor related	Number of DLHs	$ 551008.	13200	$          41.74	Per DLH
Production orders	Number of Orders	$ 54,019	1400	$          38.59	Per Order
Order size	Number of MHs	$ 836616.	6200	$       134.94	Per MH

Question 2

Correct answer----------$218,886.90

Working

Cost assigned to Modular homes
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Material handling	$                   429.19	510.00	$     218,886.90

Calculation of Activity rates
Activity Cost Pool	Activity driver	Overhead Cost (A)	Expected Activity (B)	Activity rate (A/B)
Material handling	Number of Material moves	$ 266100.	620	$       429.19	Per Material move

Question 3

Answer----------

	Total Activity cost
K52W	$ 11,523.81
Z94T	$ 6,898.38

Working

Cost assigned to K52W
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Setting up batches	$                     70.62	68.00	$        4,802.16
processing customer orders	$                     27.68	48	$        1,328.64
assembling products	$                     12.81	421	$        5,393.01
Total Overheads assigned			$       11,523.81

Cost assigned to Z94T
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Setting up batches	$                     70.62	55	$ 3,884.10
processing customer orders	$                     27.68	33	$ 913.44
assembling products	$                     12.81	164	$ 2,100.84
Total Overheads assigned			$ 6,898.38