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he following cost information is available for David, Ltd.:        Activity Allocation Base Volume of Activity Overhead Cost Purchasing Purchase orders 25,000 $150,000 Receiving Shipments received 17,000 68,000 Machine setups Setups 3,000 190,000 Quality control Inspections 20,000 100,000   Direct materials are $15 per unit for luxury handbags and $10 per unit for deluxe handbags.  There were 12,000 direct labor hours. Each of which was charged to inventory at $18 per hour. Required:  Calculate the overhead rate using activity-based costing for the Purchasing Activity.       $6.50 per purchase order     $6 per purchase order     $5 per purchase order     $4 per purchase order

he following cost information is available for David, Ltd.:        Activity Allocation Base Volume of Activity Overhead Cost Purchasing Purchase orders 25,000 $150,000 Receiving Shipments received 17,000 68,000 Machine setups Setups 3,000 190,000 Quality control Inspections 20,000 100,000   Direct materials are $15 per unit for luxury handbags and $10 per unit for deluxe handbags.  There were 12,000 direct labor hours. Each of which was charged to inventory at $18 per hour. Required:  Calculate the overhead rate using activity-based costing for the Purchasing Activity.       $6.50 per purchase order     $6 per purchase order     $5 per purchase order     $4 per purchase order

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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QUESTION 33

  1. The following cost information is available for David, Ltd.: 

          Activity

    Allocation Base

    Volume of Activity

    Overhead Cost

    Purchasing

    Purchase orders

    25,000

    $150,000

    Receiving

    Shipments received

    17,000

    68,000

    Machine setups

    Setups

    3,000

    190,000

    Quality control

    Inspections

    20,000

    100,000

     

    Direct materials are $15 per unit for luxury handbags and $10 per unit for deluxe handbags.  There were 12,000 direct labor hours. Each of which was charged to inventory at $18 per hour.

    Required:  Calculate the overhead rate using activity-based costing for the Purchasing Activity.

     

       

    $6.50 per purchase order
       

    $6 per purchase order
       

    $5 per purchase order
       

    $4 per purchase order

     

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