value 100.00 points Requirement 1 (a) Which of the following statements are true
ID: 2527106 • Letter: V
Question
value 100.00 points Requirement 1 (a) Which of the following statements are true concerning the predetermined overhead rate when the direct labor-hour requirement for the Deluxe model dropped from 5 hours to 2 hours? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) The predetermined overhead rate decreased because the total direct labor-hours dropped. The predetermined overhead rate increased because the total estimated overhead cost increased. ?The predetermined overhead rate decreases because the total estimated overhead cost increased. The predetermined overhead rate increased because the total direct labor-hours dropped. (b) Which of the following statements are true concerning the unit product costs for the Tourist model when the direct labor-hour requirement for the Deluxe model drops from 5 hours to 2 hours? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) The traditional unit product cost of the Tourist model increases when the Deluxe model's direct labor-hour requirement decreases Economically, the fact that the Deluxe model's direct labor-hour requirement changed should have little or no impact on the cost of the Tourist model. The ABC unit product cost of the Tourist model increases when the Deluxe model's direct labor- hour requirement decreases, but by not by as much as the traditional unit product cost 2]Explanation / Answer
Requirement 1:
a. The predetermined overhead rate increased because total direct labor hours dropped.
b. The traditional unit product cost of the Tourist model increases when the Deluxe model's direct labor hour requirement decreases.
Requirement 2 :
a. Traditional unit product cost for the Deluxe model : $ 140
Traditional unit product cost = $ 25 + $ ( 12 x 5) + $ [ (550,000 / 50,000) x 10,000 ] / 2,000 = $ 140.
b. The traditional unit product costs for the two models are unchanged by the change in production orders because neither the total estimated overhead cost nor the total direct labor hours were affected.
The traditional unit product for the two models are unchanged by the change in production orders because traditional overhead allocations based on direct labor hours ignore other cost drivers such as production orders.
c. ABC unit product cost for the Deluxe model : $ 195.80
Overhead Cost Labor Related [( 80,000 / 50,000) x 10,000] / 2,000 $ 8.00 Machine Setup [ ( 150,000 / 5,000) x 3,000] / 2,000 45.00 Production Orders [ ( 70,000 / 500) x 290 ] / 2,000 20.30 General Factory [ 250,000 / 40,000) x 12,000] / 2,000 37.50 Direct Materials 25.00 Direct Labor 60.00 Unit Product Cost for Deluxe model ( ABC) $ 195.80Related Questions
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