Question

PART ONE

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.

Model	Annual Sales in Units
High F	11,800
Great P	17,800

National uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows:

	High F			Great P
Direct materials	$	39.80		$	27.20
Direct labor	$	19.40		$	15.00

Budget factory overhead:
Engineering and Design	2,760	engineering hours	$	441,600
Quality Control	13,190	inspection hours		325,500
Machinery	34,070	machine hours		610,200
Miscellaneous Overhead	26,750	direct labor hours		159,480
Total			$	1,536,780

National's controller had been researching activity-based costing and decided to switch to it. A special study determined National's two products have the following budgeted activities:

	High F	Great P
Engineering and design hours	1,140	1,620
Quality control inspection hours	5,820	7,370
Machine hours	20,460	13,610
Labor hours	12,180	14,570

Using activity-based costing, total overhead per unit of the High F model is:

• $43.35.

• $46.48.

• $60.12.

• $64.84.

• $160.00.

PART TWO

Barstow Manufacturing Company has two service departments — product design and engineering support, and two production departments — assembly and finishing. The distribution of each service department's efforts to the other departments is shown below:

FROM	TO
	Design			Support			Assembly			Finishing
Design	0	%		20	%		20	%		60	%
Support	20	%		0	%		30	%		50	%

The direct operating costs of the departments (including both variable and fixed costs) were as follows:

Design	$	110,000
Engineering Support	$	190,000
Assembly	$	560,000
Finishing	$	800,000

The total cost accumulated in the assembly department using the reciprocal method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

• $1,885,468.

• $601,675.

• $657,083.

• $1,058,325.

• $1,002,917.

Answer 1