Hails Corporation manufactures two products: Product Q21F and Product H44W. The company uses a plantwide overhead rate based on direct labor- hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Q21F and H44W. Activity Cost Pool Machining Machine setups Product design Order size Machine-hours Number of setups Number of products Direct labor-hours 26.71% O 50.00% O 34.18% Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Activity Measure 60.89% Total Cost Total Activity 195,000 13,000 MHs 90,000 150 setups $ $ $ 64,000 2 products $ 280,000 10,000 DLHs Product Q21F Using the ABC system, the percentage of the total overhead cost that is assigned to Product Q21F is closest to: 9,000 80 1 6,000 Product H44W 4,000 70 1 4,000

Hails Corporation manufactures two products: Product Q21F and Product H44W. The company uses a plantwide overhead rate based on direct labor- hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Q21F and H44W. Activity Cost Pool Machining Machine setups Product design Order size Machine-hours Number of setups Number of products Direct labor-hours 26.71% O 50.00% O 34.18% Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Activity Measure 60.89% Total Cost Total Activity 195,000 13,000 MHs 90,000 150 setups $ $ $ 64,000 2 products $ 280,000 10,000 DLHs Product Q21F Using the ABC system, the percentage of the total overhead cost that is assigned to Product Q21F is closest to: 9,000 80 1 6,000 Product H44W 4,000 70 1 4,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter5: Product And Service Costing: Job-order System

Section: Chapter Questions

Problem 23E

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