Balakrishnan/Managerial Accounting, 2e What are the cost objects? A. Annual over

Question

Balakrishnan/Managerial Accounting, 2e What are the cost objects? A. Annual overhead costs. B. Boss Hog and Boss Bear. C. Units per year. D. Machine hours/unit. E. Material and Labor costs/unit. LOS-B ss Boss Manufacturing Company manufactures two types of bass boats. Bass Boss provides the following data, pertinent to allocating its annual overhead cost of $435,000: 70. Bas Boss Hog Boss Bear 20,000 Bass Boss Product Units per year Machine hours/unit 15,000 3.0 5.0 Materials cost/unit Labor cost/unit $1,500 $ 800 $2,000 $1,000 What are the cost drivers? A. Overhead costs; Units per year. B. Boss Hog: Boss Bear C. Overhead costs; Machine hours/unit. D. Machine hours/unit, Material cost/unit, Labor cost/unit E. Units per year. LOS-D provides the 71. Bass Boss Manufacturing Company manufactures two types of bass boats. Bass Boss following data, pertinent to allocating its annual overhead cost of $435,000: BossBoss Bear Bass Boss Product Hog 15,000 20,000 Units per year Machine hours/unit 3.0 5.0 Materials cost/unit Labor cost/unit $1,500 $%2,000 Determine the allocation rate for assuming the cost driver is machine hours/unit. A. $3 per machine hour B. $12.43 per machine hour C. $54,375 per machine hour D. $4.35 per machine hour E. $$5,000 per machine hour LOS-A S435,000 ÷((15,00 x 3)·(20,000 x 5)) 3-12

Explanation / Answer

70) Machine hours/unit; Material cost/unit; Labor cost/unit

Working: A cost driver refers to the unit of an activity that esults to a change in activity's cost; and in the current scenario it is Machine hours/unit; Material cost/unit; Labor cost/unit

71) $3 per machine hour

Working:

Allocation rate: 435,000 / [(15,000*3) + (20,000*5)]

435,000 / (45,000 + 100,000)]

435,000 / 145,000

$3 per machine hour

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