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101) Potter & Weasley Company had the following activities, estimated

Question : 101) Potter & Weasley Company had the following activities, estimated : 1876950

101) Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases:

ActivitiesIndirect Activity CostsAllocation Base

Account inquiry (hours)$86,4002,700

Account billing (lines)$56,00032,000

Account verification (accounts)$38,25025,500

Correspondence (letters)$80,00010,000

Potter & Weasley uses activity based costing.

The above activities are used by Departments P and Q as follows:

Department PDepartment Q

Account inquiry (hours)400800

Account billing (lines)10,0004,000

Account verification (accounts)6,0007,000

Correspondence (letters)1,0002,000

What is the cost per driver unit for the account verification activity?

A) $1.75

B) $1.50

C) $9.56

D) $8.00

102) Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases:

ActivitiesIndirect Activity CostsAllocation Base

Account inquiry (hours)$86,4002,700

Account billing (lines)$56,00032,000

Account verification (accounts)$38,25025,500

Correspondence (letters)$80,00010,000

Potter & Weasley uses activity based costing.

The above activities are used by Departments P and Q as follows:

Department PDepartment Q

Account inquiry (hours)400800

Account billing (lines)10,0004,000

Account verification (accounts)6,0007,000

Correspondence (letters)1,0002,000

What is the cost per driver unit for the correspondence activity?

A) $8.00

B) $1.75

C) $29.63

D) $32.00

103) Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases:

ActivitiesIndirect Activity CostsAllocation Base

Account inquiry (hours)$86,4002,700

Account billing (lines)$56,00032,000

Account verification (accounts)$38,25025,500

Correspondence (letters)$80,00010,000

Potter & Weasley uses activity based costing.

The above activities are used by Departments P and Q as follows:

Department PDepartment Q

Account inquiry (hours)400800

Account billing (lines)10,0004,000

Account verification (accounts)6,0007,000

Correspondence (letters)1,0002,000

How much of the account inquiry cost will be assigned to Department Q?

A) $6,400

B) $25,600

C) $12,800

D) $8,000

104) Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases:

ActivitiesIndirect Activity CostsAllocation Base

Account inquiry (hours)$86,4002,700

Account billing (lines)$56,00032,000

Account verification (accounts)$38,25025,500

Correspondence (letters)$80,00010,000

Potter & Weasley uses activity based costing.

The above activities are used by Departments P and Q as follows:

Department PDepartment Q

Account inquiry (hours)400800

Account billing (lines)10,0004,000

Account verification (accounts)6,0007,000

Correspondence (letters)1,0002,000

How much of the correspondence cost will be assigned to Department P?

A) $16,000

B) $9,000

C) $8,000

D) $1,500

105) Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases:

ActivitiesIndirect Activity CostsAllocation Base

Account inquiry (hours)$86,4002,700

Account billing (lines)$56,00032,000

Account verification (accounts)$38,25025,500

Correspondence (letters)$80,00010,000

Potter & Weasley uses activity based costing.

The above activities are used by Departments P and Q as follows:

Department PDepartment Q

Account inquiry (hours)400800

Account billing (lines)10,0004,000

Account verification (accounts)6,0007,000

Correspondence (letters)1,0002,000

How much of the account verification costs will be assigned to Department P?

A) $9,000

B) $8,000

C) $10,500

D) $3,000

106) Watson's Computer Company uses ABC to account for its manufacturing process.

ActivitiesIndirect activity

budgetAllocation base (cost driver)

Materials handling $52,000Based on number of parts

Machine setup $30,000Based on number of setups

Assembling $9,750Based on number of parts

Packaging$15,300Based on number of finished units

Watson's Computer Company expects to produce 2,250 computers. Watson's Computer Company also expects to use 13,000 parts and have 20 setups.

The allocation rate for materials handling will be

A) $4.00.

B) $6.80.

C) $23.11.

D) $7.01.

107) Watson's Computer Company uses ABC to account for its manufacturing process.

ActivitiesIndirect activity

budgetAllocation base (cost driver)

Materials handling $52,000Based on number of parts

Machine setup $30,000Based on number of setups

Assembling $9,750Based on number of parts

Packaging$15,300Based on number of finished units

Watson's Computer Company expects to produce 2,250 computers. Watson's Computer Company also expects to use 13,000 parts and have 20 setups.

The allocation rate for machine setups is

A) $7.01.

B) $1,500.

C) $488.

D) $765.

108) Watson's Computer Company uses ABC to account for its manufacturing process.

ActivitiesIndirect activity

budgetAllocation base (cost driver)

Materials handling $52,000Based on number of parts

Machine setup $30,000Based on number of setups

Assembling $9,750Based on number of parts

Packaging$15,300Based on number of finished units

Watson's Computer Company expects to produce 2,250 computers. Watson's Computer Company also expects to use 13,000 parts and have 20 setups.

The allocation rate for packaging is

A) $4.00.

B) $13.33.

C) $6.80.

D) $7.01.

109) Hummingbird Manufacturing manufactures small parts and uses an activity-based costing system.

ActivityEst. Indirect Activity

CostsAllocation baseCost allocation rate

Materials$75,000Material moves$3.00/move

Assembling$255,000Direct labor hours$10.00/dir. labor hour

Packaging$90,000# of finished units$1.00/finished unit

The following parts were produced in October with the following information:

Part# ProducedMaterials Costs# MovesDir. Labor Hrs.

A2,250 $3,000900250

B4,000 $6,5001,700325

C4,750 $9,0002,5001,500

Total manufacturing costs for part A is

A) $7,450.

B) $5,200.

C) $10,450.

D) $8,200.

250 hour × $10=2,500

110) Hummingbird Manufacturing manufactures small parts and uses an activity-based costing system.

ActivityEst. Indirect Activity

CostsAllocation baseCost allocation rate

Materials$75,000Material moves$3.00/move

Assembling$255,000Direct labor hours$10.00/dir. labor hour

Packaging$90,000# of finished units$1.00/finished unit

The following parts were produced in October with the following information:

Part# ProducedMaterials Costs# MovesDir. Labor Hrs.

A2,250 $3,000900250

B4,000 $6,5001,700325

C4,750 $9,0002,5001,500

Total manufacturing costs for part B is

A) $8,350.

B) $12,350.

C) $14,850.

D) $18,850.

Solution
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