16. Arrojo Corporation manufactures two products: Product X71B and Product C911·

Question

16. Arrojo Corporation manufactures two products: Product X71B and Product C911·The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products X71B and C911. Total Cost Total Activity S 275,000 11,000 MHs S 210,000 350 setups $ 48,000 S 300,000 10,000 DLHs Activity Cost Pool Machining Machine setups Product design General factory Activity Measure Machine-hours Number of setups Number of products Direct labor-hours 2 products Product X71B Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Product C911 6,000 130 5,000 6,000 4,000 Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product X71B? A) $416,500 B) $499,800 C) S333,200 D) $372,000 17. Nabais Corporation uses the weighted-average method in its process costing system. Operating data for the Lubricating Department for the month of October appear below: Percent Complete wi Respect to Conversi Units 3,300 30,700 Beginning work in process inventory Transferred in from the prior department during October Completed and transferred to the next department during October.32,200 Ending work in process inventory 80% 1,800 6% What were the equivalent units for conversion costs in the Lubricating Department for October? A) 31,780 B) 33,280 C) 32,200 D) 29,200

Explanation / Answer

Answer =1 CALCULATION OF THE OVERHEAD RATE AS PER THE LABOUR HOURS 1) Activity Total Cost Machiening $            2,75,000 Machiene Set-Ups $            2,10,000 Product Design $                48,000 General Factory $            3,00,000 Total $            8,33,000 Divide by : total direct labour hours = $                10,000 DL Hs. Overhead Recovery Rate per Hours $                        83 Per DL Hs. CALCULATION OF THE OVERHEAD COST OF PRODUCT X71B Tota Labour Hours used for X17B = $                  6,000 DL Hs. Recover rate per DL Hrs.= $                        83 Per DL Hs. Product of these = $            4,99,800 Answer = Option B = $ 499,800 Answer =2 CALCULATION OF THE EQUIVALENT PRODUCTION OF CONVERSION COST In weighted average method we cannot take the Opening WIP only completed and trannsfered out and closing inventory wil take as total material % of completion Equivalent unit Unit Completed and transfereed to the next department 30700 100% 30700 Ending Work in process 1800 60% 1080 TOAL 31780 Answer = Option A = 31,780 units

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

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