Question

Kearney Inc. has a factory with the following characteristics: direct labor of $12595, direct materials of $11064 fixed overhead of $37671, variable overhead of $27439, 5513 units produced, and 816 shipments made. One of its products is LQ6. LQ6 requires 11 minutes of labor to make each unit. The factory made 433 units of LQ6 at a materials cost of $1153. LQ6 also requires 28 shipments. All of the factory's labor costs $26 per hour.

Kearney's cost allocation system uses two cost pools. Pool A includes all variable overhead and uses shipments as the allocation base. Pool B includes all fixed overhead and uses direct labor as the allocation base.

a.How much cost from Pool A is allocated to LQ6?

b.How much of Pool B overhead is allocated to LQ6?

c.Notwithstanding your answers above, assume Kearney allocated $1097 from pool A and S1033 from pool B to LQ6. How much is LQ6's manufacturing cost per unit?

d. I had a great analytical question prepared, but it needed the above numbers to fall into a slightly different range to make sense under all possible values. Unfortunately, CCLE refuses to allow changes to value sets once they are generated, even though it has buttons to do so, they don't actually work. If I make a mistake and want to fix it, too bad. (I could completely rewrite all the earlier allocation questions with new variable names, but I already rewrote them once and am at the limits of my endurance for BS.) Honestly, this assignment has been one of the most frustrating experiences of my teaching career because CCLE's system is so un-user friendly and full of arbitrary restrictions and bugs. I have spent hours of wasted time, and am now out of patience, so I give up and will provide you a freebee for the last question.

Question: True or false, this whole question is just a rant meant to vent my frustration? (Hint: it is true if that isn't obvious.)

Answer 1