Question 1

4 / 4 pts

Active Frame, Inc., manufactures clear and tinted sport glasses. The manufacturing of clear glasses takes 45,000 direct labor hours and involves 1,700 parts and 115 inspections. The manufacturing of tinted glasses takes 115,000 direct labor hours and involves 1,400 parts and 450 inspections. The traditional method applies $560,000 of overhead on the basis of direct labor hours. What is the amount of overhead per direct labor hour applied to the clear glass products?

  

$933.33

   

$322.500

   

$157,500

 

The overhead rate = $560,000/(45,000 + 115,000) = $3.50 per direct labor hour. The labor applied to the clear product = $3.50 per direct labor hour × 45,000 direct labor hours = $157,500.

  

$402,500

 

 

Question 2

4 / 4 pts

Using ABC Costing overhead costs are assigned to each product based on ________.

  

a predetermined overhead rate for a single cost driver

   

machine hours per product

   

the proportion of that product’s use of the cost driver

   

price of the product

 

 

Question 3

4 / 4 pts

Which is the correct formula for computing the overhead rate for ABC Costing?

  

estimated use of the cost driver for production/estimated overhead for the activity

   

estimated overhead for the activity/estimated use of the cost driver for the activity

   

estimated overhead for the product/estimated use of the cost driver for the activity

   

estimated use of the cost driver for production/estimated overhead for the activity

 

 

Question 4

4 / 4 pts

A company anticipates the cost to heat the building will be $21,000. Product A takes up 500 square feet of space, while Product B takes up 200 square feet. The activity rate per product using activity-based costing would be which of the following?

  

$11/square foot

   

$30/square foot

 

Activity rate per product = Estimated activity costs / Total estimated activity

$21,000 / (500 + 200) = $30/square foot

  

$4.20/square foot

   

$15.20/square foot

 

 

Question 5

4 / 4 pts

A company calculated the predetermined overhead based on an estimated overhead of $70,000, and the activity for the cost driver was estimated as 2,500 hours. If product A utilized 1,350 hours and product B utilized 1,100 hours, what was the total amount of overhead assigned to the products?

  

$37,800

   

$35,000

   

$68,600

 

Activity rate per unit * Total actual activity = total overhead assigned

Activity rate per unit = Estimated activity cost / total estimated activity

Activity rate per unit = $70,000 / 2,500 hours = $2.80/hour

Total overhead assigned = $2.80/hour * (1,350 + 1,100 hours) = $68,600

  

$30,800