Question

Figure 7-4. Honeydew Company produces two products, a high end laptop computer under the label Bunsen...

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
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