Reference no: EM132603538

Frederick Group uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs: materials handling, machine setup, insertion of parts and finishing.

The budgeted activity costs for the upcoming year and their allocation bases are as follows:

Activity                            Total Budgeted Manufacturing Overhead Cost                  Allocation Base

Materials handling                             $8,700                                                        Number of parts

Machine setup                                   4,650                                                       Number of setups

Insertion of parts                                49,300                                                         Number of parts

Finishing                                             75,600                                               Finishing direct labor hours

Total                                                  138,250

Frederick Group expects to produce 1,000 chrome wheels during the year. The wheels are expected to use 2,900 parts, require 15 setups and consume 1,800 hours of finishing time.

Job 420 used 150 parts, required 4 setups, and consumed 120 finishing hours.

Job 510 used 500 parts, required 5 setups, and consumed 320 finishing hours.

Question 1: What is the manufacturing overhead cost that should be assigned to Job 510?

a. $1,500

b. $24,990

c. $250,000

d. $13,440

Question 2: what is the manufacturing overhead cost that should be assigned to Job 420?

a. $450

b. $1,240

c. $250,000

d. $9,280

Question 3: what is the cost allocation rate for each activity?

a. Activity Cost Allocation Rates:

Materials handling........... $ 3 per part

Machine setup................. $310 per setup

Insertion........................... $ 17 per part

Finishing.......................... $ 42 per hour

b. Activity Cost Allocation Rates:

Materials handling........... $ 6 per part

Machine setup................. $620 per setup

Insertion........................... $ 34 per part

Finishing.......................... $ 42 per hour

c. Activity Cost Allocation Rates:

Materials handling........... $ 1 per part

Machine setup................. $ 1 per setup

Insertion........................... $ 7 per part

Finishing.......................... $ 4 per hour

d. Activity Cost Allocation Rates:

Materials handling........... $ 300 per part

Machine setup................. $31000 per setup

Insertion........................... $ 1700 per part

Finishing.......................... $ 4200 per hour