1. 2. 3. Gemstone LLC produces kayaks and has recently adopted activity-based co

Question

1. 2. 3. Gemstone LLC produces kayaks and has recently adopted activity-based costing. Information on the following topics was gathered concerning the purchasing department: writing purchase orders for plywood. ordering key parts, number of plywood purchase orders written, number of key parts orders placed. The total overhead costs in purchasing is $600,000 of which $400,000 Is associated with writing purchase orders for plywood. If there are 40,000 purchase orders written for plywood, the overhead application rate for writing plywood purchase orders is Select one o a. $10 O b. $15 O C. Neither A nor

Explanation / Answer

Question no:1 Answer is Option (a) $10 Over head application rate writing plywood purchase order = Total cost of writing of Purchase orders /Number of Purchase orders Over head application rate writing plywood purchase order =$400,000 /40,000 =$10 Question no:2 Answer is option (b) $8000 Unfavorable Material Quality variance = (Actual units produced *Actual Quantity per unit *Standrad rate) - (Actual Quantity produced * Standard Quantity Per unit *Standard rate) Material Quality variance = (2000* 11 ft *$4) - (2000*10 ft *$4) =$88000 -$80,000 =$8000 unfavorable Question no:3 Answer is option (C ) $88000 Unfavorable Material Quality variance = (Actual units produced *Actual Quantity per unit *Standrad rate) - (Actual Quantity produced * Standard Quantity Per unit *Standard rate) Material Quality variance = (2000* 21 ft *$4) - (2000*10 ft *$4) =$168,000 -$80,000 =$88000 unfavorable

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