Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Challenger Factory allocate to regular widget production if budgeted production for the period is 75,000 units and actual production for the period is 72,000 units?

• Question 1

  1 out of 1 points

  	Challenger Factory produces two similar products - regular widgets and deluxe widgets. The total plant overhead budget is $675,000 with 300,000 estimated direct labor hours. It is further estimated that deluxe widget production will need 3 direct labor hours for each unit and regular widget production will require 2 direct labor hours for each unit. ​ Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Challenger Factory allocate to regular widget production if budgeted production for the period is 75,000 units and actual production for the period is 72,000 units?
  	Selected Answer: d.  $324,000 Answers: a.  $162,000 b.  $337,500 c.  $168,750 d.  $324,000 Response Feedback: Rationale: Overhead allocated to regular widget = Single plantwide factory overhead rate × Actual direct labor hours for the period for regular widget production = $2.25* × 144,000** direct labor hours = $324,000 Single Plantwide Factory Overhead Rate = Total Budgeted Plant Overhead ÷ Total Budgeted Plantwide Allocation Base Single plantwide factory overhead rate = $675,000 ÷ 300,000 direct labor hours = $2.25* per direct labor hour Actual direct labor hours for the period for regular widget production = Direct labor hours per unit × Total number of units = 2 direct labor hours × 72,000 units = 144,000** direct labor hours

• Question 2

  1 out of 1 points

  	Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below.   Activity Cost Activity Base Procurement $  370,000  Number of purchase orders Scheduling   250,000 Number of production orders Materials handling   500,000 Number of moves Product development   730,000 Number of engineering changes Production 1,500,000 Machine hours     ​ Number of Purchase Orders  Number of Production Orders ​ Number of Moves ​ Number of Engineering Changes ​ Machine Hours ​ Number of Units Disk drives 4,000 300 1,400 10  2,000 2,000 Tape drives 4,000 150   800  10  8,000 4,000 Wire drives 12,000  800 4,000 25 10,000 2,500 ​ ​ Determine the activity-based cost for each disk drive unit.
  	Selected Answer: c.  $279.57 Answers: a.  $394.12 b.  $130.69 c.  $279.57 d.  $92.25 Response Feedback: Rationale: ​The activity-based cost for each disk drive = $559,132* ÷ 2,000 units = $279.57​ Activity Activity-Base Usage × Activity Rate = Activity Cost Procurement 4,000 orders × $18.50 per order = $  74,000   Scheduling 300 orders × $200 per order =   60,000 Materials handling 1,400 moves × $80.65 per move =  112,910 Product development 10 engineering changes ​ × ​ $16,222 per change ​ = ​  162,222 Production 2,000 machine hours × $75 per machine hour =  150,000 Total ​ ​ ​ ​   $559,132* ​

• Question 3

  1 out of 1 points

  	Which of the following does not rely on managerial decisions involving accurate product costing?
  	Selected Answer: b.  product constraints Answers: a.  product price b.  product constraints c.  product mix d.  emphasis of a product line

• Question 4

  1 out of 1 points

  	The Kaumajet Factory produces two products - table lamps and desk lamps. It has two separate departments - Finishing and Production. The overhead budget for the Finishing Department is $550,000, using 500,000 direct labor hours. The overhead budget for the Production Department is $400,000 using 80,000 direct labor hours. ​ If the budget estimates that a desk lamp will require 1 hours of finishing and 2 hours of production, what is the total amount of factory overhead the Kaumajet Factory will allocate to desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours, if 26,000 units are produced?
  	Selected Answer: d.  $288,600 Answers: a.  $475,000 b.  $187,200 c.  $540,000 d.  $288,600 Response Feedback: Rationale: Factory overhead allocated to 26,000 desk lamps = $11.101 × 26,000 units = $288,600​ Production Department Factory Overhead Rate = Budgeted Department Factory Overhead ÷ Budgeted Department Allocation Base ​Overhead rate per hour for the Finishing Department = $550,000 ÷ 500,000 estimated direct labor hours = $1.10* per direct labor hour Overhead rate per hour for the Production Department = $400,000 ÷ 80,000 estimated direct labor hours = $5.00** per direct labor hour​ ​ Allocation Base Usage per Unit × Production Department Factory Overhead Rate = Allocated Factory Overhead per Unit of Product Desk lamp ​ ​ ​ ​ ​ Finishing Department 1 direct labor hour × $1.10* per dlh = $ 1.10  Production Department 2 direct labor hours ×  $5.00** per dlh = 10.00 Total overhead cost per table lamp ​ ​ ​ ​ $11.101

• Question 5

  1 out of 1 points

  	Blackwelder Factory produces two similar products - small lamps and desk lamps. The total plant overhead budget is $640,000 with 400,000 estimated direct labor hours. It is further estimated that small lamp production will require 275,000 direct labor hours and desk lamp production will need 125,000 direct labor hours. ​ Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Blackwelder Factory allocate to desk lamp production if actual direct hours for the period is 118,000?
  	Selected Answer: b.  $188,800 Answers: a.  $200,000 b.  $188,800 c.  $118,000 d.  $125,000 Response Feedback: Rationale: Single Plantwide Factory Overhead Rate = Total Budgeted Plant Overhead ÷ Total Budgeted Plantwide Allocation Base Single Plantwide Factory Overhead Rate= $640,000 ÷ 400,000 direct labor hours = $1.60 per direct labor hour Overhead allocated to the period = Single plantwide factory overhead rate × Actual direct labor hours for the period for desk lamp production = $1.60 × 118,000 direct labor hours = $188,800 The factory overhead allocated to desk lamp production is $188,800.​

• Question 6

  1 out of 1 points

  	Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below.   Activity Cost Activity Base Procurement $  370,000  Number of purchase orders Scheduling   250,000 Number of production orders Materials handling   500,000 Number of moves Product development   730,000 Number of engineering changes Production 1,500,000 Machine hours     ​ Number of Purchase Orders  Number of Production Orders ​ Number of Moves ​ Number of Engineering Changes ​ Machine Hours ​ Number of Units Disk drives 4,000 300 1,400 10  2,000 2,000 Tape drives 4,000 150   800  10  8,000 4,000 Wire drives 12,000  800 4,000 25 10,000 2,500 ​ ​ Determine the activity rate for product development per change.
  	Selected Answer: c.  $16,222 Answers: a.  $8,588 b.  $30,417 c.  $16,222 d.  $73,000 Response Feedback: Rationale: Activity Rate = Budgeted Activity Cost ÷ Total Activity-Base Usage​ Activity Budgeted Activity Cost ÷ Total Activity-Base Usage = Activity Rate Product development $730,000 ÷ 45* changes = $16,222 ​​ Activity-Base Usage Products Number of Engineering Changes Disk drives 10 changes Tape drives                     10 Wire drives                     25 Total  45* changes

• Question 7

  1 out of 1 points

  	Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours. ​   Overhead Direct Labor Hours (dlh) Product  A   B  Painting Dept. $248,000 10,000 dlh   16 dlh     4 dlh Finishing Dept.   72,000     10,000                 4            16         Totals $320,000 20,000 dlh   20 dlh    20 dlh ​ ​ Determine the overhead from both production departments allocated to each unit of Product A if Blue Ridge Marketing Inc. uses a multiple department rate system. ​
  	Selected Answer: c.  $425.60 per unit Answers: a.  $214.40 per unit b.  $396.80 per unit c.  $425.60 per unit d.  $320.00 per unit Response Feedback: Rationale: ​ ​ ​ ​ Allocation Base Usage per Unit ​ ​ × Production Department Factory Overhead Rate ​ ​ = ​ Allocated Factory Overhead per Unit of Product Product A ​ ​ ​ ​ ​ ​ Painting Department 16 direct labor hours ​ × ​ $24.80* per dlh ​ = ​ $396.80 ​ Finishing Department 4 direct labor hours ​ × ​ $ 7.20** per dlh ​ = ​     28.80 Total overhead cost per unit of Product A ​ ​ ​ ​ ​ $425.60 ​ Production Department Factory Overhead Rate = Budgeted Department Factory Overhead ÷ Budgeted Department Allocation Base Overhead rate per hour for the Painting Department = $248,000 ÷ 10,000 estimated direct labor hours = $24.80* Overhead rate per hour for the Finishing Department = $72,000 ÷ 10,000 estimated direct labor hours = $7.20**

• Question 8

  0 out of 1 points

  	The Kaumajet Factory produces two products - table lamps and desk lamps. It has two separate departments - Finishing and Production. The overhead budget for the Finishing Department is $550,000, using 500,000 direct labor hours. The overhead budget for the Production Department is $400,000 using 80,000 direct labor hours. ​ If the budget estimates that a desk lamp will require 1 hours of finishing and 2 hours of production, how much factory overhead will the Kaumajet Factory allocate to each unit of desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours?
  	Selected Answer: b.  $7.20 Answers: a.  $5.00 b.  $7.20 c.  $4.91 d.  $11.10 Response Feedback: Rationale: ​ ​ Allocation Base Usage per Unit × Production Department Factory Overhead Rate = Allocated Factory Overhead per Unit of Product Desk lamp ​ ​ ​ ​ ​ Finishing Department 1 direct labor hour × $1.10* per dlh = $ 1.10 Production Department 2 direct labor hours ×  $5.00** per dlh =   10.00 Total overhead cost per table lamp ​ ​ ​ ​ $11.10 ​​Production Department Factory Overhead Rate = Budgeted Department Factory Overhead ÷ Budgeted Department Allocation Base Overhead rate per hour for the Finishing Department = $550,000 ÷ 500,000 estimated direct labor hours = $1.10* per direct labor hour Overhead rate per hour for the Production Department = $400,000 ÷ 80,000 estimated direct labor hours = $5.00** per direct labor hour ​

• Question 9

  1 out of 1 points

  	Activity rates are determined by
  	Selected Answer: c.  dividing the cost budgeted for each activity pool by the estimated activity base for that pool. Answers: a.  dividing the actual cost for each activity pool by the actual activity base for that pool. b.  dividing the actual cost for each activity pool by the estimated activity base for that pool. c.  dividing the cost budgeted for each activity pool by the estimated activity base for that pool. d.  dividing the cost budgeted for each activity pool by the actual activity base in that pool.

• Question 10

  1 out of 1 points

  	The Skagit Company manufactures Hooks and Nooks. The following shows the activities per product and total activity information:   Setups Inspections Assembly (dlh) Hooks - 4,000 units 1 3 1 Nooks - 8,000 units 2 2 3         ​       Activity Pool Activity Base Budgeted Amount Setups 20,000 $  60,000 Inspections 24,000 120,000 Assembly (dlh) 28,000 420,000 ​ Calculate the total factory overhead to be charged to Nooks.
  	Selected Answer: d.  $488,000 Answers: a.  $600,000 b.  $400,000 c.  $300,000 d.  $488,000 Response Feedback: Rationale: The total factory overhead to be charged to Nooks = $61* × 8,000 units = $488,000 ​ Activity Budgeted Activity Cost ÷ Activity-Base Usage = Activity Rate × Activity Usage = Activity Cost Setups $60,000 ÷ 20,000 setups = $3 per setup × 2 setups = $ 6 Inspections $120,000 ÷ 24,000 inspections = $5 per inspection × 2 inspections =   10  Assembly (dlh) $420,000 ÷ 28,000 dlh = $15 per dlh × 3 dlh =    45  Total ​ ​ ​ ​ ​ ​ ​ ​   $61*​

• Question 11

  1 out of 1 points

  	The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows: Activity Activity Rate Hair washing $4.00 Conditioning $3.50 Chemical treatment $25.00 Styling $10.00 ​   Hair Washing Conditioning Chemical Treatment Styling Haircut 1 1 0 0 Complete style 1 1 0 1 Perm 2 3 1 1 Highlights 3 4 2 1 ​ ​ Calculate the cost of services for a haircut.
  	Selected Answer: a.  $7.50 Answers: a.  $7.50 b.  $4.00 c.  $11.50 d.  $3.50 Response Feedback: Rationale: The cost of services for a haircut = $7.50* ​ Activity Activity Rate × Activity Usage = Activity Cost Hair washing $4 per hair wash × 1 = $4.00  Conditioning $3.50 per conditioning × 1 =  3.50 Chemical treatment $25 per treatment × 0 =  0.00 Styling $10 per styling × 0 =  0.00 Total ​ ​ ​ ​  $7.50*

• Question 12

  1 out of 1 points

  	Pinacle Corp. budgeted $700,000 of overhead cost for the current year. Actual overhead costs for the year were $650,000. Pinacle's plantwide allocation base, machine hours, was budgeted at 100,000 hours. Actual machine hours were 80,000. A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced. Pinacle's plantwide factory overhead rate for the current year is:
  	Selected Answer: a.  $7.00 per machine hour Answers: a.  $7.00 per machine hour b.  $8.75 per machine hour c.  $6.50 per machine hour d.  $8.13 per machine hour Response Feedback: Rationale: Single Plantwide Factory Overhead Rate = Total Budgeted Factory Overhead ÷ Total Budgeted Plantwide Allocation Base Single Plantwide Factory Overhead Rate = $700,000 ÷ 100,000 machine hours = $7 per machine hour

• Question 13

  1 out of 1 points

  	The Aleutian Company produces two products, Rings and Dings. They are manufactured in two departments—Fabrication and Assembly. Data for the products and departments are listed below. Product ​ Number of ​units Labor hrs per unit Machine hours per unit Rings 1,000 4 6 Dings 2,000 3 9 All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $90,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $105,000. The Aleutian Company uses departmental overhead rates. The Fabrication Department uses machine hours for an allocation base, and the Assembly Department uses labor hours. ​ What is the Fabrication Department overhead rate per machine hour?
  	Selected Answer: c.  $3.75 Answers: a.  $9.00 b.  $10.50 c.  $3.75 d.  $8.12 Response Feedback: Rationale: Fabrication Department overhead rate per machine hour = $90,000 / 24,000 machine hours* = $3.75​ Product Number of Units × Machine Hours per Unit = Total Labor Hours Rings 1,000 units × 6 machine hours = 6,000 machine hours Dings 2,000 units × 9 machine hours = 18,000 machine hours Total ​ ​ ​ ​ 24,000 machine hours*

• Question 14

  1 out of 1 points

  	Adirondak Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. ​   Overhead Total Direct Labor Hours DLH per Product  A   B  Painting Dept. $250,000 10,000 16  4 Finishing Dept.   75,000 12,000  4 16    Totals $325,000 22,000 20 20 ​ ​ Calculate the plantwide factory overhead rate for Adirondack Marketing Inc.
  	Selected Answer: a.  $14.77 per dlh Answers: a.  $14.77 per dlh b.  $ 6.25 per dlh c.  $25.00 per dlh d.  $0.07 per dlh Response Feedback: Rationale: Single Plantwide Factory Overhead Rate = Total Budgeted Factory Overhead ÷ Total Budgeted Plantwide Allocation Base Single Plantwide Factory Overhead Rate = $325,000 ÷ 22,000 direct labor hours = $14.77 per direct labor hour

• Question 15

  1 out of 1 points

  	The Botosan Factory has determined that its budgeted factory overhead budget for the year is $13,500,000 and budgeted direct labor hours are 10,000,000. If the actual direct labor hours for the period are 350,000, how much overhead would be allocated to the period?
  	Selected Answer: c.  $472,500 Answers: a.  $236,250 b.  $675,000 c.  $472,500 d.  $470,630 Response Feedback: Rationale: Single Plantwide Factory Overhead Rate = Total Budgeted Factory Overhead ÷ Total Budgeted Plantwide Allocation Base Single plantwide factory overhead rate = $13,500,000 ÷ 10,000,000 budgeted direct labor hours = $1.35 per direct labor hour Overhead allocated to the period = Single plantwide factory overhead rate × Actual direct labor hours for the period = $1.35 × 350,000 direct labor hours = $472,500 Overhead allocated to the period is $472,500.