5 PROBLEMS Problem 5-1 Norman Company has the following data: Budgeted Overhead Budgeted Level Overhead Overhead Cost Pool Cost for Cost Driver Cost Driver Rate Direct materials $ 120.000 3,000 pounds Weight of raw materials 40 Machine set-up 9.750 325 repetitions Number of repetitions 30 Machine repair time 1.045 5 units Unit of time"* 209 Inspections 8.100 135 inspects Number of inspections 60 Requirements for Job 222 Direct materials 100 pounds "One unit equals 15-minute intervals Machine set-up 25 repetitions Machine repair time 0.5 hours Inspections 10 inspections OO Required: Compute the total overhead that should be assigned to Job 222. Problem 5-2 Kingcoil Company has identified the following overhead cost pool and cost drivers: Overhead Cost Pool Activity Cost Cost Drivers Machine set-up 180.000 1,500 set-up hours Material handling 50.000 12,500 pounds of materials Electric power 20.000 20,000 kilowatt-hours The following cost information pertains to the production of products A and B: Product A Product B Number of units produced 4.000 20.000 Direct materials costs 20.000 25.000 Direct labor costs 12.000 20.000 Number of set-up hours 100 120 Pounds of materials used 500 1.500 Kilowatt-hours 1.000 2.000 Required: Compute the unit costs for Product A and Product B Problem 5-3 Lassie Company manufactures Gameboy. It plans to implement an activity based costing system, The controller has prepared the following estimates regarding costs pools and activity level for the next year. Cost Pool Activity Cost Activity Driver Levels Electricity 100.000 40.000 kwh Machine set-ups 300.000 1.500 set-up hours Material moves 80.000 40.000 moves Quality inspections 120.000 30.000 inspections 600 000 The plant's present cost accounting system allocates manufacturing overhead to jobs using a plant-wide overhead rate based on machine hours. The total machine hours for the coming year are estimated to be 100,000 hours. The company has received a request for a bid to deliver 2,000 units of its Gameboy model GB-E1. The following estimates pertain to the production of 2,000 units of GB-E1: Direct materials costs 30.000 Direct labor ($10/hour) 15.000 Machine hours 2.000 Set-up hours 50 Electricity (kwh) 2.000 Number of quality inspections 500 Number of material moves 200 Required: What is the estimated manufacturing costs per unit of GB-E1 if the ABC system is implemented?Problem 5-4 Hollywood Company manufactures two models of high-pressure steam values. the MAR model and the HAR modal. Data regarding the two products are shown below: Annual Total Direct Product Direct labor-hours Production Labor-Hours MAR 02 DLHs per unit 20.000 units 4000 DLHs HAR 0.4 DLHs per unit 40.000 units 10.000 DLHs 20.000. Ell-Ha Additional information about the company follows: a. Product MAR requires $35 in direct materials per unit. and product HAR requires 525. b. The direct labor rate is $20 per hour. c. The company has always used direct labor-hours as the base for applying manufacturing overhead coat to products. Manufacturing overhead totals$1.480.000 per year. :5. Product MAR is more complex to manufacture than product HAR and requires the use of a spedal milling machine. e. Because of the special work required in id] above. the company Ie considering the use of activity-based costing to apply overhead cost to products. Three activity cost pools have been identied and the rst- stage allocation have been completed. Data concerning these activity cost pools are shown below: Total Activy 92313291 Activity Measure Total Cost MAR l-IAR Total Machine set-ups Number of set-ups 5 100.000 150 100 250 Special milling Machine-hour 300.000 1.000 0 1.000 General factory Direct labor-hour 1.000.000 4.000 10.000 20.000 W Required: 1. Assume that the company continues to use direct labor-hours as the base for applying overhead costs to products. how much will be the unit cost for product MAR? 2. Assume that the company decides to use activity-based coating to apply overhead cost to products. how much will be the unit cost of product MAR? 3. Assume that the company decided to use activity based coating to apply overhead cost to products. how much will be the unit cost of product HAR