Question

Gold Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product RST.

Direct material cost per unit of RST	$	23
Total estimated manufacturing overhead	$	316,000
Total cost per unit of RST	$	88
Total estimated machine hours		158,000	MH
Direct labor cost per unit of RST	$	31

Multiple Choice

22.00 MH per unit of RST.

17.00 MH per unit of RST.

54.00 MH per unit of RST.

52.50 MH per unit of RST.

2.00 MH per unit of RST.

The following data relates to Spurrier Company's estimated amounts for next year.

Estimated:	Department 1				Department 2
Manufacturing overhead costs	$	1,420,000			$	3,620,000
Direct labor hours		556,000	DLH			806,000	DLH
Machine hours		106,000	MH			40,000	MH

What is the company's plantwide overhead rate if direct labor hours are the allocation base? (Round your answer to two decimal places.)

Multiple Choice

$3.83 per direct labor hour.

$0.37 per direct labor hour.

$2.55 per direct labor hour.

$0.58 per direct labor hour.

$3.70 per direct labor hour.

A company has two products: A1 and B2. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:

				Budgeted Activity
Activity Cost Pool	Budgeted Cost			Product A1			Product B2
Activity 1	$	50,000			1,400			5,000
Activity 2	$	65,000			2,440			4,960
Activity 3	$	84,000			7,400			1,000

Annual production and sales level of Product A1 is 8,680 units, and the annual production and sales level of Product B2 is 22,510 units. What is the approximate overhead cost per unit of Product A1 under activity-based costing?

Multiple Choice

$10.00

$4.12

$8.78

$12.25

$7.81

Answer 1

	Gold Company:
	Calculation of Plan Wide Overhead Rate:
A	Total Estimated OH Cost	316000
B	Total Estimated Machine Hours	158000
A/B	Recovery Rate PerMH	2.00
	Answer is 2.00 MH
	Spurrier Company:
	Calculation of Plan Wide Overhead Rate:
A	Total Estimated OH Cost	5040000	(Dep 1 +Dep2)
B	Total Estimated Machine Hours	1362000	(Dep 1 +Dep2)
A/B	Recovery Rate Per DLH	3.70
	Answer is 3.70 Per DLH
	Problem 3:
	Calculation of Activity Rate for Each Pool:
		A	Budgeted Activity		B	A/B
	Activity Cost Pools	Budgeted Cost	Product A1	Product B2	Total Activity	Activity Rate
	Activity 1	50000	1400	5000	6400	7.81
	Activity 2	65000	2440	4960	7400	8.78
	Activity 3	84000	7400	1000	8400	10.00
		199000
	Allcoation of Cost to Product A1:	A	B	A*B
	Activity Cost Pools	Product A1	Activity Rate	Allocated OH
	Activity 1	1400	7.81	10,938
	Activity 2	2440	8.78	21,432
	Activity 3	7400	10.00	74,000
			Total Allcoation	1,06,370
			Total Units	8680
			Cost PU	12.25
	Answer is 12.25