Question

Figure 7-4.
Honeydew Company produces two products, a high end laptop computer under the label Bunsen Laptops, and an inexpensive desktop computer under the label Beaker Computers. The two products use two overhead activities, with the following costs:

Setting up equipment	$ 2,000
Machining	12,000

The controller has collected the expected annual prime costs for each product, the machine hours, the setup hours, and the expected production.

	Bunsen	Beaker
Direct Labor	$20,000	$5,000
Direct Materials	15,000	4,000
Expected Production in Units	2,000	2,000
Machine hours	750	1,500
Setup hours	50	50

1. Refer to Figure 7-4. Calculate Beaker's consumption ratio for setup hours.

	a.	0.50
	b.	0.45
	c.	0.90
	d.	0.25
	e.	0.75

2. Refer to Figure 7-4. Calculate the overhead cost per unit for Bunsen Laptops, using a plantwide rate based on direct labor costs.

	a.	$9.63 per laptop
	b.	$22.45 per laptop
	c.	$5.60 per laptop
	d.	$7.22 per laptop
	e.	$7.50 per laptop

3. Refer to Figure 7-4. Calculate the overhead cost per unit for each Beaker Computer, using overhead rates based on machine hours and setup hours.

	a.	$6.10 per unit
	b.	$4.50 per unit
	c.	$5.75 per unit
	d.	$3.88 per unit

Answer 1