21 alpha company manufactures breadboxes and uses an activity based costing system t 4306477

21 alpha company manufactures breadboxes and uses an activity based costing system t 4306477

21) Alpha Company manufactures breadboxes and uses an activity-based costing system. The following information is provided for the month of May:

Activity

Estimated Indirect Activity Costs

Allocation Base

Estimated Quantity of Allocation Base

Materials handling

$3,500

Number of parts

5,000 parts

Assembling

$12,000

Number of parts

5,000 parts

Packaging

$5,750

Number of bread boxes

1,250 bread boxes

Each breadbox consists of four parts, and the direct materials cost per breadbox is $7.00. There is no direct labor. What is the total manufacturing cost per breadbox?

A) $17.40

B) $24.00

C) $12.40

D) $26.00

22) Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities

Allocated Costs

Allocation Base

Account inquiry (hours)

$60,000

2,000 hours

Account billing (lines)

$30,000

20,000 lines

Account verification (accounts)

$15,000

20,000 accounts

Correspondence (letters)

$10,000

1,000 letters

The above activities are carried out at two of its regional offices.

 

Northeast Office

Midwest Office

Account inquiry (hours)

100 hours

200 hours

Account billing (lines)

10,000 lines

7,000 lines

Account verification (accounts)

1,000 accounts

600 accounts

Correspondence (letters)

50 letters

100 letters

What is the cost per hour for the account inquiry activity?

A) $0.75

B) $30.00

C) $10.00

D) $1.50

23) Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities

Allocated Costs

Allocation Base

Account inquiry (hours)

$60,000

2,000 hours

Account billing (lines)

$30,000

20,000 lines

Account verification (accounts)

$15,000

20,000 accounts

Correspondence (letters)

$10,000

1,000 letters

The above activities are carried out at two of its regional offices.

 

Northeast Office

Midwest Office

Account inquiry (hours)

100 hours

200 hours

Account billing (lines)

10,000 lines

7,000 lines

Account verification (accounts)

1,000 accounts

600 accounts

Correspondence (letters)

50 letters

100 letters

What is the cost per line for the account billing activity?

A) $1.50

B) $30.00

C) $1.60

D) $1.43

24) Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities

Allocated Costs

Allocation Base

Account inquiry (hours)

$60,000

2,000 hours

Account billing (lines)

$30,000

20,000 lines

Account verification (accounts)

$15,000

20,000 accounts

Correspondence (letters)

$10,000

1,000 letters

The above activities are carried out at two of its regional offices.

 

Northeast Office

Midwest Office

Account inquiry (hours)

100 hours

200 hours

Account billing (lines)

10,000 lines

7,000 lines

Account verification (accounts)

1,000 accounts

600 accounts

Correspondence (letters)

50 letters

100 letters

What is the cost per account for the account verification activity?

A) $30.00

B) $0.50

C) $2.25

D) $0.75

25) Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities

Allocated Costs

Allocation Base

Account inquiry (hours)

$60,000

2,000 hours

Account billing (lines)

$30,000

20,000 lines

Account verification (accounts)

$15,000

20,000 accounts

Correspondence (letters)

$10,000

1,000 letters

The above activities are carried out at two of its regional offices.

 

Northeast Office

Midwest Office

Account inquiry (hours)

100 hours

200 hours

Account billing (lines)

10,000 lines

7,000 lines

Account verification (accounts)

1,000 accounts

600 accounts

Correspondence (letters)

50 letters

100 letters

What is the cost per letter for the correspondence activity?

A) $10.00

B) $30.50

C) $25.00

D) $0.75

26) Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities

Allocated Costs

Allocation Base

Account inquiry (hours)

$60,000

2,000 hours

Account billing (lines)

$30,000

20,000 lines

Account verification (accounts)

$15,000

20,000 accounts

Correspondence (letters)

$10,000

1,000 letters

The above activities are carried out at two of its regional offices.

 

Northeast Office

Midwest Office

Account inquiry (hours)

100 hours

200 hours

Account billing (lines)

10,000 lines

7,000 lines

Account verification (accounts)

1,000 accounts

600 accounts

Correspondence (letters)

50 letters

100 letters

How much of the account inquiry cost will be assigned to the Midwest Office?

A) $2,000

B) $6,500

C) $3,000

D) $6,000

27) Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities

Allocated Costs

Allocation Base

Account inquiry (hours)

$60,000

2,000 hours

Account billing (lines)

$30,000

20,000 lines

Account verification (accounts)

$15,000

20,000 accounts

Correspondence (letters)

$10,000

1,000 letters

The above activities are carried out at two of its regional offices.

 

Northeast Office

Midwest Office

Account inquiry (hours)

100 hours

200 hours

Account billing (lines)

10,000 lines

7,000 lines

Account verification (accounts)

1,000 accounts

600 accounts

Correspondence (letters)

50 letters

100 letters

How much of the correspondence cost will be assigned to the Northeast Office?

A) $500

B) $1,200

C) $2,500

D) $800

28) Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities

Allocated Costs

Allocation Base

Account inquiry (hours)

$60,000

2,000 hours

Account billing (lines)

$30,000

20,000 lines

Account verification (accounts)

$15,000

20,000 accounts

Correspondence (letters)

$10,000

1,000 letters

The above activities are carried out at two of its regional offices.

 

Northeast Office

Midwest Office

Account inquiry (hours)

100 hours

200 hours

Account billing (lines)

10,000 lines

7,000 lines

Account verification (accounts)

1,000 accounts

600 accounts

Correspondence (letters)

50 letters

100 letters

How much of the account verification costs will be assigned to the Northeast Office?

A) $800

B) $2,500

C) $750

D) $1,500

29) Quality Stereo Company has provided the following information regarding its activity-based costing system:

Purchasing department costs are allocated based on purchase orders and the cost allocation rate is $75 per purchase order.

?Assembly department costs are allocated based on the number of parts used and the cost allocation rate is $1.00 per part.

?Packaging department costs are allocated based on the number of units produced and the allocation rate is $2.00 per unit produced.

Each stereo produced has fifty parts, and the direct materials cost per unit is $70. There are no direct labor costs. Quality Stereo has an order for 1,000 stereos which will require 50 purchase orders in all. What is the total cost for the 1,000 stereos?

A) $125,750

B) $55,750

C) $123,750

D) $122,000

30) Orlando Avionics makes three types of radios for small aircraft—Model A, Model B, and Model C. The manufacturing operations are mechanized and there is no direct labor. Manufacturing overhead costs are significant, and Orlando has adopted an activity-based costing system. Direct materials costs per unit for each model are as follows:

Model A$28

Model B$32

Model C$40

Orlando has three activities—assembly, materials management, and testing. The cost driver for assembly is machine hours. The cost driver for materials management is the number of parts, and the cost driver for testing is the number of units of product. Total costs and production volumes for the year 2015 were estimated as follows:

Total cost

Allocation Base

Cost Driver

Assembly

$780,000

120,000

Machine hours

Materials management

$120,000

80,000

Parts

Testing

$22,500

5,000

Units

The Model A radio requires twelve parts to construct, and requires 16 machine hours of processing. What is the manufacturing cost to make one unit of Model A?

A) $150.00

B) $132.00

C) $126.50

D) $154.50

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