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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text: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%
50.00%
34.18%
Activity Measure
O 60.89%
Machine-hours
Number of setups
Number of products
Direct labor-hours
Activity Measure
Total Cost Total Activity
$ 195,000 13,000 MHs
90,000 150 setups
$
$ 64,000
$
280,000
Product Q21F
9,000
80
1
6,000
Using the ABC system, the percentage of the total overhead cost that is
assigned to Product Q21F is closest to:
2 products
10,000 DLHs
Product H44W
4,000
70
1
4,000
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