The Manoli Company has collected the following data for use in calculating produ
ID: 2411572 • Letter: T
Question
The Manoli Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
rug cleaners sweepers total
units produced 100,000 250,000 350,000
prime costs $200,000 $584,000 $784,000
direct labor hours 10,000 40,000 50,000
machine hours 20,000 10,000 30,000
number of setups 25 75 100
inspection hours 1,600 2,400 4,000
number of moves 140 160 300
Departmental Data: (expected and actual)
molding assembly total
direct labor hours
rug cleaners 5,000 5,000 10,000
sweepers 5,000 35,000 40,000
total 10,000 40,000 50,000
machine hours
rug cleaners 17,000 3,000 20,000
sweepers 3,000 7,000 10,000
total 20,000 10,000 30,000
overhead costs
machining $130,000 $ 40,000 $170,000
moving materials 50,000 40,000 90,000
setting up 80,000 20,000 100,000
inspecting products 30,000 40,000 70,000
total 290,000 $140,000 $430,000
1. Refer to Figure 4-10. What is the unit product cost for rug cleaners if a plantwide rate is used based on direct labor hours?
a. $11.00
b. $ 2.86
c. $ 5.40
d. $ 4.12
2. Refer to Figure 4-10. Manoli Company uses departmental overhead rates: Molding uses machine hours and Assembly uses labor hours. What is the unit product cost for sweepers if departmental overhead rates are used?
a. $3.50
b. $8.50
c. $3.00
d. $1.40
3. Refer to Figure 4-10. What are the consumption ratios for rug cleaners and sweepers respectively for the inspection of products activity?
a. .3; .7
b. .2; .8
c. .4; .6
d. .67; .33
4. Refer to Figure 4-10. What are the consumption ratios for rug cleaners for the departments on the basis of the departmental drivers (molding; assembly)?
a. .33; .87
b. .85; .125
c. .33; .25
d. .85; .5
5. Refer to Figure 4-10. What is the activity rate for moving materials?
a. .2
b. $600
c. $300
d. $200
6. Refer to Figure 4-10. What is the unit product cost for rug cleaners using activity based costing?
a. $8.00
b. $ 7.26
c. $ 4.00
d. $ 2.95
Explanation / Answer
Solution 1:
Plantwide overhead rate per labor hour = $430,000 / 50000 = $8.60 per hour
Total cost of rug cleaners = Prime cost + Overhead cost = $200,000 + 10000*$8.60 = $286,000
Nos of unit produced = 100000
Unit product cost = $286,000 / 100000 = $2.86 per unit
Hence option b is correct.
Solution 2:
Overhead rate molding = $290,000 / 20000 = $14.50 per machine hour
Overhead rate assembly = $140,000 / 40000 = $3.50 per labor hour
Total product cost for sweepers = Prime cost + Overhead applied
= $584,000 + (3000 * $14.50) + (35000 * $3.50) = $750,000
Nos of units produced for sweeper = 250000
unit product cost = $750,000 / 250000 = $3
Hence option c is correct.
Solution 3:
consumption ratios for rug cleaners and sweepers respectively for the inspection of products activity -
Rug cleaner = Inspection hours rug cleaner / Total inspection hours = 1600 / 4000 = 0.4
Sweeper = Inspection hours Sweeper / Total inspection hours = 2400 / 4000 = 0.6
Hence option c is correct.
Solution 4:
Consumption ratios for rug cleaners for the departments on the basis of the departmental drivers (molding; assembly):
Molding = Machine hours for rug cleaner / Total machine hours in molding = 17000 / 20000 = 0.85
Assembly = Labor hours for rug cleaner / Total labor hours in assembly = 5000/40000 = 0.125
Hence option b is correct.
Note: I have answered first 4 parts of the question as per chegg policy, Kindly post separate question for answer of remaining parts.
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