Question

		Figure 4-10 The Manoli Company has collected the following data for use in calculating product costs: Activity Data: (expected and actual) rug cleaners     sweepers         total units produced                                    100,000             250,000           350,000 prime costs                                          $200,000         $584,000         $784,000 direct labor hours                                10,000                40,000              50,000 machine hours                                     20,000                10,000              30,000 number of setups                                 25                              75                   100 inspection hours                                  1,600   2,400 4,000 number of moves                                140   160 300 Departmental Data: (expected and actual) molding           assembly         total direct labor hours rug cleaners   5,000 5,000               10,000 sweepers                          5,000   35,000               40,000 total                                 10,000   40,000               50,000
		machine hours rug cleaners 17,000 3,000               20,000 sweepers                       3,000 7,000               10,000 total                                   20,000   10,000               30,000 overhead costs machining                      $130,000    $ 40,000   $170,000 moving materials 50,000   40,000             90,000 setting up                           80,000   20,000           100,000 inspecting products 30,000   40,000            70,000 total                                    290,000           $140,000         $430,000

25. Refer to Figure 4-10. Manoli Company uses departmental overhead rates: Molding uses machine hours and Assembly uses labor hours. What is the unit product cost for sweepers if departmental overhead rates are used?

A) 3.50

B) 8.50

c) 2.59

D)1.40

26. Refer to Figure 4-10. What are the consumption ratios for rug cleaners and sweepers respectively for the inspection of products activity?

a) 3;7

b) 2:8

c)4:6

d) 67: 33

27. Refer to Figure 4-10. What are the consumption ratios for rug cleaners for the departments on the basis of the departmental drivers (molding; assembly)?

a) .33, .87

b) .85, .125

c) .33, .25

d) .85, .5

Answer 1

Solution 25:

Predetermined overhead rate of Molding = Estimated overhead / Estimated machine hours

= $290,000 / 20000 = $14.50 per machine hour

Predetermined overhead rate of assembly = Estimated overhead / Estimated direct labor hours

= $140,000 / 40000 = $3.50 per labor hours

Computation of Unit Product cost - Sweeper
Particulars	Amount
Prime cost	$584,000.00
Overhead - Molding (3000*$14.50)	$43,500.00
Overhead - Assembly (35000*$3.50)	$122,500.00
Total cost	$750,000.00
Nos of units	250000
Cost per unit	$3.00

Solution 26:

Consumption ratio of rug cleaners and sweepers respectively for the inspection of products activity = Consumption ratio of inspection hours = 1600 : 2400 = 4:6

Hence option c is correct.

Solution 27:

Consumption ratio of rug cleaner for the department on basis fo departmental drivers

Modling = Nos of machine hours for rug cleaner / Total machine hours = 17000/20000 = 0.85

Assembly = Nos of labor hours for rug cleaner / Total labor hours = 5000 / 40000 = 0.125

Hence option b is correct.