Question

MANAGERIAL ACCOUNTING

Q1:

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				$350,600							Number of purchase orders
Scheduling				$200,500							Number of production orders
Materials handling				$453,600							Number of moves
Product development				$702,000							Number of engineering changes
Production				$1,431,900							Machine hours
	Number of Purchase Orders			Number of Production Orders				Number of Moves			Number of Engineering Changes				Machine Hours			Number of Units
Disk drives	4,100			300				1,380			10				1,800			1,700
Tape drives	2,000			155				750			5				8,900			3,500
Wire drives	13,000			710				3,900			20				10,000			2,900

Determine the activity-based cost for each disk drive unit.

$326.93

$238.77

$18.36

$602.44

Q2:

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 Hours Per Unit	Machine Hours Per Unit
Rings	1,080	7	7
Dings	2,280	7	8

All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $80,300. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $74,300.

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 Assembly Department overhead rate per labor hour?

$3.07

$3.11

$3.29

$3.16

Q3:

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 Hours Per Unit	Machine Hours Per Unit
Rings	1,040	5	4
Dings	2,020	7	9

All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $85,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $71,100.

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 overhead cost per unit for Rings?

$33.60

$51.01

$59.96

$4.25

Q4:

The total factory overhead for Big Light Company is budgeted for the year at $948,660. Big Light manufactures two different products - night lights and desk lamps. Night lights is budgeted for 8,500 units. Each night light requires three hour of direct labor. Desk lamps is budgeted for 11,700 units. Each desk lamp requires two hours of direct labor.

a Determine the total number of budgeted direct labor hours for year.

b Determine the single plantwide factory overhead rate using direct labor hours as the allocation base. Round your answer to two decimal places, if necessary.
$

c Determine the factory overhead allocated per unit for each product using the single plantwide factory overhead rate calculated in (b). Round your answers to two decimal places, if necessary.

Night Lights = $	$
Desk Lamps = $

Answer 1

STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL
			Activity	Total	Expected	Activity
ACTIVITY COST POOL			Measures	Overheads	Activity	Rate
Procurement			Pur.order	350600	19100	18.36
Scheduling			Prod Order	200,500	1,165	172.1
Material handling			Moves	453,600	6,030	75.22
Pproduct Development			Eng change	702,000	35	20057
Production			MH	1,431,900	20,700	69.17
Activity cost per unit of Disk Drive unit:
Procurement (4100*18.36)				75276
Scheduling (300*172.10)				51630
Material Handling (1380*75.22)				103803.6
Product Development (10*20057)				200570
Production (1800*69.17)				124506
	Total Activity cost			555786
	Divide: Number of units			1700
	Activity cost per unit			326.93
Answer is $ 326.93