Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 17
Exercise 176 Plantwide overhead rate L.O. P1
[The following information applies to the questions displayed below.]
Textra Polymers produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2011 follow.
DLH
MH
$
Molding 
Trimming 

Direct labor hours 
52,000 
DLH 

48,000 

Machine hours 
30, 500 
MH 
3,600 

Overhead cost s 
$ 
730,000 
590,000 
Data for two special order parts to be manufactured by the company in 2011 follow: 
units
Machine hours
MH
MH
MH
MH
Direct labor hoursMolding
DLH
DLH
TrimmingDLH
DLH
Part A27C 
Part X82B 

Number of units 
9, 800 
units 
54,500 

Molding 
5,100 
1,020 

Trimming 
2,600 
650 

5,500 
2, 150 

700 
3,500 
1.
Exercise 176 Part 1
Required 

1. 
Compute the plantwide overhead rate using direct labor hours as the base. (Round your answer to 2 decimal places. Omit the “$” sign in your response.) 
Plantwide overhead rate 
rev: 030411
2.
Exercise 176 Part 2
2. 
Determine the overhead cost assigned to each product line using the plantwide rate computed in part 1.(Round your intermediate calculations to 2 decimal places. Omit the “$” sign in your response.) 
Product 
Overhead cost  
Part A27C 

Part X82B 
3.
Exercise 177
Department
al overhead rates L.O. P2
Textra Polymers produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2011 follow. 
Molding Trimming Direct labor hours 52,000 DLH 48,000 DLH Machine hours 30,500 MH 3,600 MH
Overhead costs
$ 730,000 $ 590,000
Data for two special order parts to be manufactured by the company in 2011 follow:
Part A27C Part X82B Number of units 9,800 units 54,500 units Machine hours Molding 5,100 MH 1,020 MH Trimming 2,600 MH 650 MH Direct labor hours Molding 5,500 DLH 2,150 DLH Trimming 700 DLH 3,500 DLHRequired 1.
Compute a departmental overhead rate for the molding department based on machine hours and a department overhead rate for the trimming department based on direct labor hours. (Round your answers to 2 decimal places. Omit the “$” sign in your response.) 
Department 
Overhead rate 

Molding  
Trimming 
2.
Determine the total overhead cost assigned to each product line using the departmental overhead rates from requirement 1. (Round your intermediate calculations to 2 decimal places and final answers to whole dollar amount. Omit the “$” sign in your response.) 
Molding Trimming
Part A27C Part X82B
Product 
Total overhead cost 

3.
Determine the overhead cost per unit for each product line using the departmental rate.. (Round your answers to 2 decimal places. Omit the “$” sign in your response.) 
Product Overhead cost
Part A27C Part X82B
4.
Exercise 179 Using the plantwide Overhead rate to assess prices L.O. A1, P1
Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow. 
$
Process 
Activity 
Overhead 
Cost 
Driver 
Quantity 

Components 
Changeover 
500,000 
Number of batches 
800  
Machining 
279,000 
Machine hours 
6,000 

Setups 
225,000 
Number of setups 
120 
$
1,004,000
Finishing
Welding
$
180,
300
Welding hours
3,000
Inspecting
210,000
Number of inspections
700
Rework
75,000
Rework orders
300$
465,300
Support
Purchasing
$
135,000
Purchase orders
450
Providing space
32,000
Number of units
5,000
Providing utilities
65,000
Number of units 5,000
$
232,000
Additional production information concerning its two product lines follows. 
produced
3,500
800
400
400 300
Machine hours
Setups
60
300
Model 145 
Model 212 

Units 
1,500 

Welding hours 
2, 200 

Batches 
400 

Number of inspections 

1,800 
4,200 

60  
Rework orders 
160 
140 

Purchase orders 
150 
Required 1.
Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. (Round your intermediate calculations and final answers to 2 decimal places. Omit the “$” sign in your response.) 
Product Overhead cost
Model 145 

Model 212 
2.
Determine the total cost per unit for each products line if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212. (Round your intermediate and final answers to 2 decimal places. Omit the “$” sign in your response.) 
Product
Model 145 Model 212
Total cost 
3.
Assume if the market price for Model 145 is $800 and the market price for Model 212 is $470, determine the profit or loss per unit for each model. (Input all amounts as positive values. Round your intermediate and final answers to 2 decimal places. Omit the “$” sign in your response.) 
Model 145 Model 212
rev: 030411 5.
Exercise 1713 Using ABC for strategic decisions L.O. P1, P3
Consider the following data for two products of Rowena Manufacturing. 
per unit
Product A 
Product B 

Number of units produced 
10,000 units 
2,000 units 

Direct labor cost(@$24 per DLH) 
0.20 DLH per unit 
0.25 DLH per unit 

Direct materials cost 
$ 2 per unit 
$  3 
Activity
$
48,000
$
Overhead costs  
Machine setup 
121,000 
Materials handling 

Quality control 
80,000 
249,000 
Required 1.
Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. (Round your answers to 2 decimal places. Omit the “$” sign in your response.) 
Manufacturing cost per unit 
2.
Assume if the market price for Product A is $20 and the market price for Product B is $60, determine the profit or loss per unit for each product. (Round your answers to 2 decimal places. Omit the “$” sign in your response. Input all amounts as positive values.) 
Product A 

Product B 
3.
Consider the following additional information about these two product lines. If ABC is used for assigning overhead costs to products, what is the cost per unit for Product A and for Product B? (Round your answers to 2 decimal places. Omit the “$” sign in your response.) 
Product A Product B
Number of setups required for production 
10 setups 
12 setups 
Number of parts required 
1 part / unit 
3 parts / unit 
Inspection hours required 
40 hours 
210 hours 
Product A Product B Manufacturing cost per unit
4.1 
Determine the profit or loss per unit for each product. (Round your answers to 2 decimal places. Input all amounts as positive values. Omit the “$” sign in your response.) 
Product A Product B
Problem 171A Evaluating product line costs and prices using ABC L.O. P3
[The following information applies to the questions displayed below.]
Healthy Day Company produces two beverages, PowerPunch and SlimLife. Data about these productsfollow. 
bottles
gallons
pounds
12,500 bottles 180,000 bottles
3
300 setups
Machine hoursMH
MH
PowerPunch

SlimLife


Production volume 
12,500 
bottles 
180,000 

Liquid materials 
1,400 
gallons 
37,000 

Dry materials 
620 
pounds 
12,000 

Bottles 

Labels 
labels per bottle 
1 
label per bottle 

Machine setups 
500 
setups 

200 
3,750 
Additional data from its two production departments follow. 
Department Driver Cost
$
Machine hours
Units $
Setups
Mixing department 

Liquid materials 
Gallons 
2,304 
Dry materials 
Pounds 
6,941 
Utilities 
1,422 

Bottling department 

Bottles 
77,000 

Labeling 
Labels per bottle 
6,525 
Machine setup 
20,000 
7.
Problem 171A Part 2
2.
What is the cost per bottle for PowerPunch and SlimLife? (Do not round intermediate calculations and round your final answers to 2 decimal places. Omit the “$” sign in your response.) 
PowerPunch  SlimLife 
Average cost per bottle 

9.
Problem 171A Part 4
4.
What is the minimum price that the company should set per bottle of SlimLife? 
$0.53 per bottle 
$0.86 per bottle 
$0.36 per bottle 
The price of SlimLife must cover the costs associated with the product, so the minimum price for this product is $0.53 / bottle. 