1.) Clean paint has identified three overhead activity cost pools and cost drive

Question

1.) Clean paint has identified three overhead activity cost pools and cost drivers for their manufacturing facility as follows:

Activity Cost Pool Cost Driver Volume

$50,000 1,000 inspections

$100,000 1,000 setups

$125,000 10,000 machine hours

The cost driver application rates for inspections, setups and machines hours are:

a. $500, $100 & $125
b. $50, $100 & $125
c. $500, $1,000 & $12.50
d. $50, $100 & $12.50
e. None of the above are correct.



2.) Using the information from the previous question, #1,
calculate the overhead applied to a paint batch that consumes 5 inspections, 6 setups and 100 machine hours.

a. $2,000
b. $2,100
c. $2,200
d. $2,300
e. None of the above are correct.


3.) Use this information for the next two questions – 29 & 30: Kenco company records the following sequential activities (1 to 6) in the manufacture of steel blades for earth movers and other construction equipment.

Activity Cost per pound


1. two ton sheets of steel are delivered and stored .05 per pound



2. overhead crane moves steel sheets to cutting machine .05 per pound



3. steel is cut to size .10 per pound



4. steel is stacked by needed size .02 per pound



5. scrap and waste steel from cutting is collected and placed in the reclaim bin
.12 per pound


6. front end loader moves precut steel as needed to start particular jobs .05 per pound



Kenco is negotiating a strategic partner agreement with the Power Steel mill. Power will deliver perfect cut-to-size steel plates directly to Kenco. Kenco will still have to ‘stack to size’.
If the strategic partnering relationship is established which activities will be eliminated for Kenco?

a. 1,2,3, & 5
b. 1,2,3
c. 1,2,3,4
d. 1,2,3,4,5,6,7
e. None of the above are correct.


4.) Kenco company records the following sequential activities (1 to 6) in the manufacture of steel blades for earth movers and other construction equipment.

Activity Cost per pound

1. two ton sheets of steel are delivered and stored .05 per pound



2. overhead crane moves steel sheets to cutting machine .05 per pound



3. steel is cut to size .10 per pound



4. steel is stacked by needed size .02 per pound



5. scrap and waste steel from cutting is collected and placed in the reclaim bin

.12 per pound



6. front end loader moves precut steel as needed to start particular jobs

.05 per pound


Kenco is negotiating a strategic partner agreement with the Power Steel mill. If Power could deliver ‘cut-to-demand’ steel to the ‘needed size’ with perfect quality. Kenco will still incur stacking by needed size. How much more per pound would Kenco be willing to pay and still have the same net cost for making parts? Kenco will still have to ‘stack to size’.

a. $.34 per pound
b. $.32 per pound
c. $.27 per pound
d. $.17 per pound
e. None of the above are correct.

Explanation / Answer

1. d. $50, $100 & $12.50 $50,000/1,000 inspections = $50 $100,000/1,000 setups = $100 $125,000/10,000 machine hours = $12.50 2. b. $2,100 consumes 5 inspections = 5*$50+ 6 setups=6*$100 +100 machine hours =100*$12.50= $2100 3.a. 1,2,3, & 5 4. 1ton = 2240 pounds b. $.32 per pound

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.