1. Managers depend on accurate factory overhead allocation to make decisions regarding product mix and product price. T OR F
2. Managers depend on the accuracy of product costing to make decisions regarding continuing operations and product mix. T OR F
3. A single plantwide factory overhead rate is computed by dividing total budgeted factory overhead by the total budgeted plantwide allocation base. T OR F
4. Bob's Biscuit Corporation budgeted $1,200,000 of factory overhead cost for the coming year. Its plantwide allocation base, machine hours, is budgeted at 100,000 hours. Budgeted units to be produced are 200,000 units. Bob's plantwide factory overhead rate is $12 per machine hour. T OR F
5. The use of a single plantwide factory overhead rate assumes that the activities causing overhead costs are the same across all departments and products. T OR F
6. The use of a single plantwide factory overhead rate assumes that the activities causing overhead costs are different across different departments and products. T OR F
7. If the activities causing overhead costs are different across different departments and products, use of a single plantwide factory overhead rate will cause distorted product costs. T OR F
8. If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours are 80,000, and the actual direct labor hours are 6,700 for the month, the amount of factory overhead to be allocated is $38,525 (if the allocation is based on direct labor hours using a single plantwide rate). T OR F
9. If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours are 80,000, and the actual direct labor hours are 6,700 for the month, the single plantwide factory overhead rate for the month is $68.65 (if the allocation is based on direct labor hours). T OR F
10. The single plantwide factory overhead rate method is very expensive to apply. T OR F

11. Roget Factory has budgeted factory overhead for the year at $15,500,000. It plans to produce 2,000,000 units of product. Budgeted direct labor hours are 1,050,000, and budgeted machine hours are 750,000. Using a single plantwide factory overhead rate based on direct labor hours, the factory overhead rate (rounded to the nearest cent) for the year is

a. $77.50

b. $14.76

c. $7.75

d. $20.67

12. Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are as follows:

Product	Number of Units	Direct Labor Hours Per Unit	Machine Hours Per Unit
Blinks	1,152	4	7
Dinks	2,128	7	5

All of the machine hours take place in the Fabrication department, which has an estimated overhead of $81,200. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $75,900.

Ramapo Company uses a single plantwide overhead rate to apply all factory overhead costs. The single plantwide rate (rounded to the nearest cent), if it is based on machine hours instead of labor hours, is

a. $6.72 per machine hour

b. $10.50 per machine hour

c. $8.40 per machine hour

d. $19.32 per machine hour

13. Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are as follows:

Product	Number of Units	Direct Labor Hours Per Unit	Machine Hours Per Unit
Blinks	1,000	4	5
Dinks	2,000	2	8

All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $72,000.

Ramapo Company uses a single plantwide overhead rate to apply all factory overhead costs. The single plantwide rate (rounded to the nearest cent), if it is based on machine hours instead of labor hours, is

a. $7.43 per machine hour

b. $19.50 per machine hour

c. $4.00 per machine hour

d. $9.00 per machine hour

14. Botosan Factory has budgeted factory overhead for the year at $665,652, and budgeted direct labor hours for the year are 426,700. If the actual direct labor hours for the month of May are 388,300, the overhead allocated for May is

a. $605,748

b. $514,886

c. $623,920

d. $732,955

15. Blackwelder Factory produces two similar products: small table lamps and desk lamps. The total factory overhead budget is $640,000 with 400,000 estimated direct labor hours. It is further estimated that small table lamp production will require 275,000 direct labor hours, and desk lamp production will need 125,000 direct labor hours.

Using a single plantwide factory overhead rate with an allocation base of direct labor hours, the factory overhead that Blackwelder Factory will allocate to small table lamp production if actual direct labor hours for the period for small table lamp production is 285,000 would be

a. $275,000

b. $456,000

c. $285,000

d. $440,000

16. Challenger Factory produces two similar products: regular widgets and deluxe widgets. The total factory overhead budget is $675,000 with 300,000 estimated direct labor hours. Deluxe widget production requires 3 direct labor hours for each unit, and regular widget production requires 2 direct labor hours for each unit.

Using a single plantwide factory overhead rate (rounded to the nearest cent) with an allocation base of direct labor hours, the factory overhead that Challenger Factory will allocate to regular widget production if budgeted production of regular widgets for the period is 75,000 units and actual production of regular widgets for the period is 72,000 units would be

a. $168,750

b. $162,000

c. $337,500

d. $324,000

17. Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours.

	Overhead	Direct Labor Hours (dlh)	Product A	Product B
Painting Dept.	$408,500	12,500 dlh	15 dlh	3 dlh
Finishing Dept.	93,030	7,000	2	15
Totals	$501,530	19,500 dlh	17 dlh	18 dlh

The overhead from both production departments allocated to each unit of Product A if Blue Ridge Marketing Inc. uses the multiple production department factory overhead rate method is

a. $32.68 per unit

b. $13.29 per unit

c. $516.78 per unit

d. $297.39 per unit

18. Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours.

	Overhead	Direct Labor Hours (dlh)	Product A	Product B
Painting Dept.	$408,375	12,500 dlh	16 dlh	2 dlh
Finishing Dept.	61,530	4,200	4	16
Totals	$469,905	16,700 dlh	20 dlh	18 dlh

The overhead from both production departments allocated to each unit of Product B if Blue Ridge Marketing Inc. uses the multiple production department factory overhead rate method is

a. $581.32 per unit

b. $299.74 per unit

c. $14.65 per unit

d. $32.67 per unit

19. Aleutian Company produces two products: Rings and Dings. They are manufactured in two departments: Fabrication and Assembly. Data for the products and departments are listed below.

Product	Number of Units	Direct Labor Hours per Unit	Machine Hours per Unit
Rings	1,000	4	6
Dings	2,000	3	9

All of the machine hours take place in the Fabrication Department, which has estimated total factory overhead of $90,000. All of the labor hours take place in the Assembly Department, which has estimated total factory overhead of $105,000.

Aleutian Company uses the multiple production department factory overhead rate method. The Fabrication Department uses machine hours as an allocation base, and the Assembly Department uses direct labor hours.

The total factory overhead allocated per unit of Rings is

a. $23.25

b. $44.10

c. $65.25

d. $64.5

20. Aleutian Company produces two products: Rings and Dings. They are manufactured in two departments: Fabrication and Assembly. Data for the products and departments are listed below.

Product	Number of Units	Direct Labor Hours per Unit	Machine Hours per Unit
Rings	1,000	4	6
Dings	2,000	3	9

All of the machine hours take place in the Fabrication Department, which has estimated total factory overhead of $90,000. All of the labor hours take place in the Assembly Department, which has estimated total factory overhead of $105,000.

Aleutian Company uses the multiple production department factory overhead rate method. The Fabrication Department uses machine hours as an allocation base, and the Assembly Department uses direct labor hours.

The Assembly Departments factory overhead rate (rounded to the nearest cent) is

a. $10.50 per direct labor hour

b. $3.75 per machine hour

c. $4.38 per machine hour

d. $19.50 per direct labor hour