Tasty Bakery produces donuts which go through ready to be packaged. Next year\'s

Question

Tasty Bakery produces donuts which go through ready to be packaged. Next year's expected costs and activities are shown be two operations, mixing and baking, before it is ·Mime 300,000 DLH Bakin 70,000 DL 800,000 M ~( Direct labor hours Machine hours Overhead costs 1,000,000 M $500,000 When calculating the departmental overthead rate, the rumerator should be? a) The total estimated departmental overhead cost b) The total amount of departmental allocation base c) The total budgeted overhead cost d) The actual quantity of the departmerntal allocation base used by the job 48. Cleveland Choppers manufactures two types of motorcycles, a Base and a Loaded model The following activity and costs have been gathered umber Number of Number oDireet L Components roduct Hes Overhead costs $27 $22,500 and number of setups are chosen as activity-cost drivers for The number of components overhead. Assumi assigned to the Loaded model? ng an ABC costing system is being used, what is the total overhead cost a) $31,875 b) $36,000 c)$28,125 d) $34,050 an ABC perspective, what causes costs to be incured? a) Financial transactions. b) The volume of units produced c) Debits and credits d) Management decisions c) Activities

Explanation / Answer

Dear Friend,

47. When we are finding out the Department Overhead rate, the numerator should be the total amount allocated to that particular department. (Option - B)

48. Allocate the cost given based on the number of set ups and number of components to find out the cost assigned to Loaded mode:

= { 27000 / (15+25) } * 25 = 16875

= { 22500 / (20+40) } * 40 = 15000

Total = 16875 + 15000

= $ 31,875.

49. Activities causes the cost to be incurred from an ABC Perspective.

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