41. A company produces heating elements that go through two operations, casting and assembling, before they are complete. Expected costs and activities for the two departments are shown below. Given this information, the departmental overhead rate for the assembling department based on direct labor hours is $5 per direct labor hour.
|
Casting
|
Assembling
|
Direct labor hours
|
1,875 DLH
|
7,500 DLH
|
Machine hours
|
12,500 MH
|
3,750 MH
|
Overhead costs
|
$75,000
|
$37,500
|
42. A company produces paint that goes through two operations, operation A and operation B, before it is complete. Expected costs and activities for the two departments are shown below. Given this information, the departmental overhead rate for Department B based on machine hours is $4 per machine hour.
|
Department
A
|
Department
B
|
Machine hours
|
50,000 MH
|
60,000 MH
|
Direct labor hours
|
78,500 DLH
|
100,800 DLH
|
Overhead costs
|
$392,500
|
$403,200
|
43. A company produces computer chips that go through two operations, operation A1 and operation B2, before they are complete. Expected costs and activities for the two departments are shown below. Departmental overhead rates are based on machine hours in department A1 and direct labor hours in department B2. Therefore, the overhead rates for department A1 and department B2 are $3.62 per machine hour and $5.73 per direct labor hour, respectively.
|
Department
A1
|
Department
B2
|
Machine hours
|
40,000 MH
|
30,000 MH
|
Direct labor hours
|
36,200 DLH
|
28,650 DLH
|
Overhead costs
|
$144,800
|
$171,900
|
44. A company produces garden benches that go through two operations, operation 1A1 and operation 2B2, before they are complete. Expected costs and activities for the two departments are shown below. Both departments have departmental overhead rates based on machine hours. Therefore, the overhead rates for department 1A1 and department 2B2 are the same.
|
Department
1A1
|
Department
2B2
|
Machine hours
|
70,000 MH
|
60,000 MH
|
Direct labor hours
|
56,350 DLH
|
50,160 DLH
|
Overhead costs
|
$225,400
|
$250,800
|
45. A company produces surgical equipment that goes through threes processes, 1A1, 2B2, and 3C3, before they are complete. Expected costs and activities for the three departments are shown below. All departments have departmental overhead rates based on direct labor hours. Therefore, the overhead rate for each department is $5 per direct labor hour.
|
Department
1A1
|
Department
2B2
|
Department
3C3
|
Machine hours
|
15,000 MH
|
25,000 MH
|
20,000 MH
|
Direct labor hours
|
22,830 DLH
|
10,650 DLH
|
29,200 DLH
|
Overhead costs
|
$114,150
|
$213,000
|
$73,000
|
46. Activity-based costing involves four steps: (1) identify activities and the costs they cause, (2) group similar activities into cost pools, (3) determine an activity rate for each activity cost pool, and (4) allocate overhead costs to products using those activity rates.
47. The more activities tracked by activity-based costing, the more accurately overhead costs are assigned.
48. In activity-based costing, an activity can involve several related tasks.
49. Activities causing overhead cost in an organization are typically separated into four levels: (1) direct activities, (2) indirect activities, (3) batch level activities, and (4) facility level activities.
50. Machine setup costs are an example of a batch level activity.