1. Lazuli Incorporated manufactures two models of cameras that can be used as cell phones, MPX, and digital camcorders. Model Annual Sales in Units High F 10,700 Great P 16,700 Lazuli uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows: High F Great P Direct materials $ 38.70 $ 26.10 Direct labor $ 18.30 $ 13.90 Budget factory overhead: Engineering and Design 2,540 engineering hours $ 431,800 Quality Control 12,970 inspection hours 258,200 Machinery 33,850 machine hours 506,850 Miscellaneous Overhead 26,530 direct labor hours 105,880 Total $ 1,302,730 Lazuli's controller had been researching activity-based costing and decided to switch to it. A special study determined Lazuli's two products have the following budgeted activities: High F Great P Engineering and design hours 1,030 1,510 Quality control inspection hours 5,710 7,260 Machine hours 20,350 13,500 Labor hours 12,070 14,460 What is the overhead application rate using the firm’s volume-based costing system? Note: Rounded to the nearest percent or cents. 2. Flash Company budgeted $558,000 manufacturing direct wages, 2,000 direct labor hours, and had the following manufacturing overhead: Overhead Cost Pool Budgeted Overhead Cost Budgeted Level for Cost Driver Overhead Cost Driver Materials handling $ 140,000 3,500 pounds Weight of materials Machine setup 14,700 420 setups Number of setups Machine repair 1,500 30,000 machine hours Machine hours Inspections 11,400 190 inspections Number of inspections Requirements for Job number 971 which manufactured 4 units of product: Direct labor 20 hours Direct materials 160 pounds Machine setup 40 setups Machine hours 15,300 machine hours Inspections 15 inspections The total overhead of Job number 971 under the Activity-Based Costing costing is:

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 5PB: Wrappers Tape makes two products: Simple and Removable. It estimates it will produce 369,991 units...

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1. Lazuli Incorporated manufactures two models of cameras that can be used as cell phones, MPX, and digital camcorders.

Model	Annual Sales in Units
High F	10,700
Great P	16,700

Lazuli uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows:

	High F	Great P
Direct materials	$ 38.70	$ 26.10
Direct labor	$ 18.30	$ 13.90

Budget factory overhead:
Engineering and Design	2,540	engineering hours	$ 431,800
Quality Control	12,970	inspection hours	258,200
Machinery	33,850	machine hours	506,850
Miscellaneous Overhead	26,530	direct labor hours	105,880
Total			$ 1,302,730

Lazuli's controller had been researching activity-based costing and decided to switch to it. A special study determined Lazuli's two products have the following budgeted activities:

	High F	Great P
Engineering and design hours	1,030	1,510
Quality control inspection hours	5,710	7,260
Machine hours	20,350	13,500
Labor hours	12,070	14,460

What is the overhead application rate using the firm’s volume-based costing system?

Note: Rounded to the nearest percent or cents.

Flash Company budgeted $558,000 manufacturing direct wages, 2,000 direct labor hours, and had the following manufacturing overhead:

Overhead Cost Pool	Budgeted Overhead Cost	Budgeted Level for Cost Driver	Overhead Cost Driver
Materials handling	$ 140,000	3,500	pounds	Weight of materials
Machine setup	14,700	420	setups	Number of setups
Machine repair	1,500	30,000	machine hours	Machine hours
Inspections	11,400	190	inspections	Number of inspections

Requirements for Job number 971 which manufactured 4 units of product:

Direct labor	20	hours
Direct materials	160	pounds
Machine setup	40	setups
Machine hours	15,300	machine hours
Inspections	15	inspections

The total overhead of Job number 971 under the Activity-Based Costing costing is:

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