Question 1: Company XYZ attempting to determine costs associated with various jobs. Current production records show the following information for two recent jobs:
Job 1 Job 2
Direct materials costs $15,600 $31,200
Direct labor costs:
Assembly Department $3,900 $5,200
Cutting Department $10,400 $2,600
Machine hours used in the
Assembly Department 200 600
Units completed 150 200
Assume overhead application rates of $16 per machine hour for the Assembly Department and 150 percent of direct labor costs (dollars) for the Cutting Department.
Required:
a. What are the total overhead costs applied to Job 1?
b. What is the total cost associated with Job 2?
Question 2: A company manufactures two products: A and B. The overhead costs have been divided into four overhead pools that use the following cost drivers:
Number
Number Number of Labor Labor
Product of Orders of Setups Transactions Hours
X 60 20 50 2,000
Y 20 80 70 500
Cost per pool: $16,000 $13,000 $2,400 $20,000
Required:
a. Assign overhead costs to products X and Y using a direct labor hours basis.
b. Assign overhead costs to products X and Y using activity-based costing.
Question 3: TCK sells all of its output to the Final Product Division of the company. The only product of the Components Division is a remote control shell used by the Final Product Division. If bought from outside, the retail price would be $2 per shell. Each remote control completed by the Final Product Division requires one shell. Production quantity and cost data for the year are as follows:
Remote control shells 10,000 shells
Direct materials $3,000
Direct labor $2,000
Factory overhead (25 percent is variable) $2,000
Administrative expenses (20 percent is variable) $2,500
Required: Compute the transfer price per unit for a remote control shell using
a. Market price.
b. Variable product costs plus 20 percent.
c. Absorption costs plus 20 percent.