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Homework 5

# Homework 5

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Managerial Accounting
Managerial Accounting

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12/30/2013

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Managerial Accounting ECO 374.02 Spring 2013Homework #5Due date: Mar 23 2013
Question 1
: Job 607 was recently completed. The following data have been recorded:Direct materials \$3,405Direct labor-hours 54 labor hoursDirect labor wage rate \$13 per labor hour Machine hours 158 machine hoursThe company applies manufacturing overhead on the basis of machine hours. The predeterminedoverhead rate is \$14 per machine-hour. Calculate the total cost that would be recorded for Job607.
Question 2
: Matt Company uses activity-based costing. The company has 2 products: A and B.The annual production and sales of Product A is 8,000 units and of Product B is 6,000 units.There are 3 activity cost pools, with estimated total cost and expected activity as follows:
Expected Activity
Activity Cost Pool Estimated Cost
Product A

Product B

Total
Activity 1 \$20,000 100 400 500Activity 2 \$37,000 800 200 1000Activity 3 \$91,200 800 3000 3800What is the cost per unit of Product A under activity-based costing?
Question 3:
Drewniak Corporation has provided the following data from its activity-based costing system:The company makes 430 units of product O37W a year, requiring a total of 690 machine-hours,40 orders, and 10 inspection-hours per year. The product's direct material cost is \$35.72 per unitand its direct labor cost is \$29.46 per unit.According to the activity-based costing system, the average manufacturing cost of productO37W is closest to:A. \$94.11 per unitB. \$89.72 per unitC. \$65.18 per unitD. \$92.49 per unit

2
Question 4:
The controller of Ferrence Company estimates the amount of materials handling overhead costthat should be allocated to the company's two products using the data that are given below:The total materials handling cost for the year is expected to be \$16,486.40.a.)

If the materials handling cost is allocated on the basis of direct labor-hours, how much of the total materials handling cost would be allocated to the wall mirrors? b.)

If the materials handling cost is allocated on the basis of material moves, how much of the total materials handling cost would be allocated to the specialty windows?
Question 5:
Cosgrove Company manufactures two products, Product K-7 and Product L-15. Product L-15 isof fairly recent origin, having been developed as an attempt to enter a market closely related tothat of Product K-7. Product L-15 is the more complex of the two products, requiring 2.0 hoursof direct labor time per unit to manufacture compared to 1.0 hour of direct labor time for ProductK-7. Product L-15 is produced on an automated production line.Overhead currently is applied to the products on the basis of direct labor-hours. The companyestimated it would incur \$510,000 in manufacturing overhead costs and produce 10,000 units of Product L-15 and 40,000 units of Product K- 7 during the current year.Unit costs for materials and labor are:Required:a. Compute the predetermined overhead rate under the current method, and determine the unit product cost of each product for the current year. b. The company is considering the use of activity-based costing as an alternative to its traditionalcosting method for manufacturing overhead. Data relating to the company's activity cost poolsfor the current year are given below: