Oxley Machining Company has identified the following overhead activities, cost,
ID: 2539879 • Letter: O
Question
Oxley Machining Company has identified the following overhead activities, cost, and activity drivers for the coming year Expected Cost $60,000 $45,000 $90,000 Activity Driver Number of setups Inspection hours Machine hours Number of parts Activity Capacity 300 4,500 18,000 50,000 Activity Setting up Grinding Receiving The company produces several different machine widgets used by other manufacturers. separate batches for two of these widgets are: Information on Widget A Widget B $850 $600 100 $950 $600 50 Direct materials Direct labour Units completed No. of setups Inspection hours Machine hours Parts used 4 20 20 30 40 The company's normal activity is 20,000 direct labour hours. Each batch uses 50 hours of direct labour. Upon investigation, you discover that Receiving employs one worker, who spends 80% of her time on the receiving activity and 20% ofher time on inspecting products. Her salary is $40,000. Receiving also uses a forklift, at a cost of $8,000 per year for amortization and fuel. The forklift is used only in receiving. Required: Choose the best answer for each of the following multiple-choice questions based on the preceding date for Oxley Machining Company 13. The amount of cost assigned to the receiving activity is A. $16,000 B. $36,000 C. $40,000 D. $46,000 E. $50,000 14. The activity rate for receiving is A. $0.80 per part B. S0.72 per part C. $0.812 per part D. $0.32 per part E. $0.50 per part 10Explanation / Answer
Only first 4 sub-questions are answered.
13. c)40000
Forklift maintenance=8000$
Salary=40000*80%=32000$.
Hence total=8000+32000=40000$
14.Activity rate of Receiving = 40000/50000=0.8
Option (a) 0.8
15.Activity rate of setting up =60000/300=$200
Option (e)200
16. Activity rate for grinding=90000/18000=$5
Option(c )$5
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