Question

37. The receiving department of Owen has three activities: unloading, counting goods, and inspecting. Unloading requires a forklift that is leased for $15,000 per year. The forklift is used only for unloading. The fuel cost for the forklift is $2,000 per year. Inspection requires special testing equipment that has a depreciation of $500 per year and an operating cost of $1,000 per year. Receiving has four employees who each have an average salary of $35,000 per year. The work distribution matrix for the receiving personnel is as follows:

Activity	Percentage of Time on Each Activity
Unloading	25%
Counting	40%
Inspecting	35%

Calculate the cost of unloading.

a.$56,000 b.$50,500 c.$54,000 d.$52,000

39. Fame Company manufactures engines. Fame produces all the parts necessary for its engines, except for one electronic component, which is purchased from two local suppliers: Hydra International and Parable Company. Both suppliers are reliable and rarely deliver late. Hydra sells the component for $12.00 per unit, while Parable sells the same component for $10.00. Fame purchases 80% of its components from Parable because of the lower price it offers. The total annual demand is 95,000 units.

I. Activity Data
	Activity Cost
Inspecting components (sampling only)	$ 210,000
Reworking products (due to failed component)	$2,454,000
Warranty work (due to failed component)	$1,923,000

II. Supplier Data
	Hydra	Parable
	International	Company
Unit purchase price	$12.00	$10.00
Units purchased	19,000	76,000
Sampling hours	60	2,600
Rework hours	150	3,800
Warranty hours	550	7,000

Calculate the activity rate for reworking products based on rework hours. (Note: Round your answer to the nearest dollar.)

a.$605 per hour b.$621 per hour c.$595 per hour d.$602 per hour e.$622 per hour

48. A costing system that first assigns costs to activities and then to cost objects is called:

a.job-order costing.

b.nonunit-level costing.

c.activity-based costing.

d.facility costing.

e.volume based costing.

Answer 1

37. Solution: The correct option is “d” i.e $ 52000 (Note)

Note:

Unloading Equipment lease(Forklift)                                      $ 15000

Unloading Equipment Fuel(Forklift)                                        $ 2000

Operating Labor($ 35000/employee*4 employees*0.25) $ 35000

Total Cost of Unloading                                                          $ 52000