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91) Telecom uses activity-based costing to allocate all manufacturing conversion

Question : 91) Telecom uses activity-based costing to allocate all manufacturing conversion : 1876949

91) Telecom uses activity-based costing to allocate all manufacturing conversion costs. Telecom produces cellular telephones; each phone has $40.00 of direct materials, includes 30 parts and requires 3 hours of machine time. Additional information follows:

ActivityAllocation BaseCost Allocation Rate

Materials handlingNumber of parts$0.50 per part

MachiningMachine hours$14.00 per machine hour

AssemblingNumber of parts$1.00 per part

PackagingNumber of finished units$2.00 per finished unit

What is the cost of machining per phone?

A) $42.00

B) $30.00

C) $6.00

D) $15.00

92) Telecom uses activity-based costing to allocate all manufacturing conversion costs. Telecom produces cellular telephones; each phone has $40.00 of direct materials, includes 30 parts and requires 3 hours of machine time. Additional information follows:

ActivityAllocation BaseCost Allocation Rate

Materials handlingNumber of parts$0.50 per part

MachiningMachine hours$14.00 per machine hour

AssemblingNumber of parts$1.00 per part

PackagingNumber of finished units$2.00 per finished unit

What is the cost of assembling per phone?

A) $6.00

B) $42.00

C) $15.00

D) $30.00

93) Swiss Furniture Company manufactures bookshelves and uses an activity-based costing system. The following information is provided for the month of May:

ActivityEstimated Indirect Activity CostsAllocation BaseEstimated Quantity of Allocation Base

Materials handling $6,400 Number of parts3,200 parts

Assembling $11,200 Number of parts3,200 parts

Packaging $2,240 Number of units800 bookshelves

Each bookshelf consists of 4 parts. The direct materials cost per bookshelf is $30.00.

What is the cost of materials handling and assembling per bookshelf?

A) $8.00

B) $24.80

C) $22.00

D) $14.00

94) Swiss Furniture Company manufactures bookshelves and uses an activity-based costing system to allocate all manufacturing conversion costs. The following information is provided for the month of May:

ActivityEstimated Indirect Activity CostsAllocation BaseEstimated Quantity of Allocation Base

Materials handling $6,400Number of parts3,200 parts

Assembling $11,200Number of parts3,200 parts

Packaging $2,240Number of bookshelves800 bookshelves

Each bookshelf consists of 4 parts. The direct materials cost per bookshelf is $30.00.

What is the total manufacturing cost per bookshelf?

A) $24.80

B) $22.00

C) $54.80

D) $52.00

95) Back Porch Company manufactures lawn chairs using an activity-based costing system to allocate all manufacturing conversion costs. The following information is provided for the month of June:

ActivityEstimated Indirect Activity CostsAllocation BaseEstimated Quantity of Allocation Base

Materials handling $12,000Number of parts12,000 parts

Assembling $16,800Number of parts12,000 parts

Packaging $4,500Number of lawn chairs1,500 lawn chairs

Each lawn chair consists of 8 parts; the total direct materials cost per lawn chair is $10.00.

What is the total cost of materials handling and assembling for each lawn chair?

A) $32.20

B) $19.20

C) $21.20

D) $11.20

96) Back Porch Company manufactures lawn chairs using an activity-based costing system to allocate all manufacturing conversion costs. The following information is provided for the month of June:

ActivityEstimated Indirect Activity CostsAllocation BaseEstimated Quantity of Allocation Base

Materials handling $12,000Number of parts12,000 parts

Assembling $16,800Number of parts12,000 parts

Packaging $4,500Number of lawn chairs1,500 lawn chairs

Each lawn chair consists of 8 parts; the total direct materials cost per lawn chair is $10.00.

What is the total cost of packaging per lawn chair?

A) $13.00

B) $11.20

C) $8.00

D) $3.00

97) Back Porch Company manufactures lawn chairs using an activity-based costing system to allocate all manufacturing conversion costs. The following information is provided for the month of June:

ActivityEstimated Indirect Activity CostsAllocation BaseEstimated Quantity of Allocation Base

Materials handling $12,000Number of parts12,000 parts

Assembling $16,800Number of parts12,000 parts

Packaging $4,500Number of lawn chairs1,500 lawn chairs

Each lawn chair consists of 8 parts; the total direct materials cost per lawn chair is $10.00.

What is the total manufacturing cost per lawn chair?

A) $32.20

B) $19.20

C) $22.20

D) $29.20

98) Back Porch Company manufactures lawn chairs using an activity-based costing system to allocate all manufacturing conversion costs. The following information is provided for the month of June:

ActivityEstimated Indirect Activity CostsAllocation BaseEstimated Quantity of Allocation Base

Materials handling $12,000Number of parts12,000 parts

Assembling $16,800Number of parts12,000 parts

Packaging $4,500Number of lawn chairs1,500 lawn chairs

Each lawn chair consists of 8 parts; the total direct materials cost per pillow is $10.00.

If the cost to purchase the same lawn chair from a supplier is $35.00, what should Back Porch do to maximize profits?

A) Purchase the lawn chair from the supplier.

B) Continue to manufacture the lawn chair.

C) Since the cost to manufacture the lawn chair is also $32.20, the company would make the same profit whether it bought the lawn chair or manufactured it.

D) Close down the business.

99) 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 inquiry activity?

A) $1.75

B) $8.64

C) $8.00

D) $32.00

100) 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 billing activity?

A) $8.00

B) $1.50

C) $14.00

D) $1.75

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