Managerial Accounting Question: SECTION B Use the following information to answe
ID: 2540619 • Letter: M
Question
Managerial Accounting Question:
SECTION B Use the following information to answer Questions 13-19. Oxley Machining Company has identified the following overhead activities, cost, and activity drivers for the coming year: Activity Setting up Inspecting Grinding Receiving 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 The company produces several different machine widgets used by other manufacturers. Information on separate batches for two of these widgets are: Widget A Widget B $950 $600 50 Direct materials $850 Direct labour $600 Units completed 100 No. of setups Inspection hours 4 Machine hours 20 Parts used 30 40 20 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% of her time on inspecting products. Her salary is $40,000. Inspecting has taken into account the worker's salary but not Receiving. In addition, Ireceiving also uses a forklift, at a cost of $8,000 per year for amortization and fuel. The forklift is used only in receiving.Explanation / Answer
15.(E)Activity rate for setting up equipment =Expected cost of setting up/ Activity capacity
= $60,000/300setups
=$200 per setup
16.(C)Activity rate for grinding=Expected grinding hours/Machine Hours
=$90,000/18,000hours
=$5.00 per machine hour
17.(D)Activity rate for inspecting=Expected Inspection cost/ Inspection hours
=$45,000/4500hours
=$10per inspection hour
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