Question

1. Boesenhofer, Inc., manufactures and sells ...

Boesenhofer, Inc., manufactures and sells two products: Product N6 and Product N7. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

		Estimated		Expected Activity
Activity Cost Pools	Activity Measures	Overhead Cost		Product N6	Product N7	Total
Labor-related	DLHs	$	345,060	2,100	5,000	7,100
Machine setups	setups		128,534	600	800	1,400
Order size	MHs		107,598	4,100	3,800	7,900
		$	581,192

The activity rate for the Machine Setups activity cost pool is closest to:

Multiple Choice

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$73.57 per setup

$91.81 per setup

$26.24 per setup

$28.32 per setup

2. Vanvalkenburg, Inc., manufactures and ...

Vanvalkenburg, Inc., manufactures and sells two products: Product Q5 and Product J0. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

		Estimated		Expected Activity
Activity Cost Pools	Activity Measures	Overhead Cost		Product Q5	Product J0	Total
Labor-related	DLHs	$	191,748	3,000	2,800	5,800
Production orders	orders		70,536	300	500	800
Order size	MHs		295,592	4,300	4,500	8,800
		$	557,876

The activity rate for the Order Size activity cost pool under activity-based costing is closest to:

Multiple Choice

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$36.23 per MH

$68.48 per MH

$96.19 per MH

$33.59 per MH

3. Weirick, Inc., manufactures and sells ...

Weirick, Inc., manufactures and sells two products: Product T8 and Product P4. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

		Estimated		Expected Activity
Activity Cost Pools	Activity Measures	Overhead Cost		Product T8	Product P4	Total
Labor-related	DLHs	$	130,500	2,400	1,200	3,600
Production orders	orders		61,530	1,300	400	1,700
Order size	MHs		962,370	3,300	3,100	6,400
		$	1,154,400

The total overhead applied to Product P4 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

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$900,840

$466,147

$524,123

$1,023,900

4. Wimpy Inc. produces and sells a single ...

Wimpy Inc. produces and sells a single product. The selling price of the product is $230.00 per unit and its variable cost is $78.20 per unit. The fixed expense is $390,456 per month.

The break-even in monthly dollar sales is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

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$1,148,400

$757,944

$591,600

$390,456

5. Majid Corporation sells a product for ...

Majid Corporation sells a product for $135 per unit. The product's current sales are 41,100 units and its break-even sales are 32,115 units.

What is the margin of safety in dollars?

Multiple Choice

$3,387,722

$5,548,500

$4,335,525

$1,212,975

Answer 1

1.

Activity rate = Estimated overhead cost/Expected activity

= 128,534/1,400

= 91.81 per setup

Option B

2.

Activity rate = 295,592/8,800

= 33.59 per mh

Option D

3.

Overhead applied to p94

= (130,500/3600)*1200 + (61,530/1,700)*400 + (962,370/6,400)*3100

= 524,123

Option C

4.

CM ratio = (230-78.20)/230 = 66%

Breakeven sales = Fixed cost /cm ratio = 390456/66% = 591,600

Option C

5.

Margin of Safety units = Sales - Breakeven sales

= 41,100-32,115 = 8985

= 8985*135

= 1,212,975

Option D