Question

Item 8

Item 8

Olmo, Inc., manufactures and sells two products: Product K0 and Product H9. The annual production and sales of Product of K0 is 1,000 units and of Product H9 is 1,000 units. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

Activity Cost Pools	Activity Measures	Estimated Overhead Cost			Expected Activity
					Product K0	Product H9	Total
Labor-related	DLHs	$	549,408		10,000	5,000	15,000
Production orders	orders		52,419		1,100	200	1,300
Order size	MHs		835,016		2,800	3,200	6,000
		$	1,436,843

The overhead applied to each unit of Product K0 under activity-based costing is closest to:

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

Forner, Inc., manufactures and sells two products: Product Z1 and Product Z8. 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 Z1	Product Z8	Total
Labor-related	DLHs	$	112,190	600	2,000	2,600
Machine setups	setups		40,440	500	700	1,200
Order size	MHs		609,770	3,000	3,200	6,200
		$	762,400

The activity rate for the Machine Setups activity cost pool under activity-based costing is closest to:

The activity rate for the Production Orders activity cost pool under activity-based costing is closest to:

Answer 1