Question

Which of the following would be an acceptable measure of activity for a material handling activity cost pool?

Options	Number of material moves	Weight of material moved
A	Yes	Yes
B	No	Yes
C	Yes	No
D	No	No

A. Option A

B. Option B

C. Option C

D. Option D

EMD Corporation manufactures two products, Product S and Product W. Product W is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product W. Product W is the more complex of the two products, requiring 3 hours of direct labor time per unit to manufacture compared to 2 hour of direct labor time for Product S. Product W is produced on an automated production line.

Overhead is currently assigned to the products on the basis of direct-labor-hours. The company estimated it would incur $912,811 in manufacturing overhead costs and produce 19,000 units of Product W and 76,000 units of Product S during the current year. Unit cost for materials and direct labor are:

	Product S			Product W
Direct material	$	15		$	25
Direct labor		10			12

Required:

a-1. Compute the predetermined overhead rate under the current method of allocation.

a-2. Determine the unit product cost of each product for the current year.

b. The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below:

			Total Activity
Activity Cost Pool	Total Cost		Product S	Product W	Total
Machine setups required	$	405,000	1,620	1,620	3,240
Purchase orders issued		60,680	553	187	740
Machine-hours required		273,450	7,460	10,770	18,230
Maintenance requests issued		173,681	673	864	1,537
	$	912,811

Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year.

- Compute the predetermined overhead rate under the current method of allocation.

-Determine the unit product cost of each product for the current year.

-Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year.

Daston Company manufactures two products, Product F and Product G. The company expects to produce and sell 1,710 units of Product F and 2,680 units of Product G during the current year. Data relating to the company’s three activity cost pools are given below for the current year:

			Total Activity
Activity Cost Pools	Total Cost		Product F		Product G		Total
Machine setups	$	34,226	125	setups	189	setups	314	setups
Purchase orders	$	181,570	1,020	orders	1,690	orders	2,710	orders
Order size	$	101,920	3,200	hours	4,080	hours	7,280	hours

Required:

Using the activity-based costing approach, determine the overhead cost per unit for each product. (Round your answers to 2 decimal places.)

Answer 1

Answer to the first MCQ:

The correct answer would be option A.

Explanation:

An acceptable measure for an activity that involves material handling can be either weight of the material moved or the number of times the material is being moved.

Answer to second question:

Answer to second question:

Answer to second question:

Answer to third question:

Answer to third question: