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Question 1
Reynoso Corporation manufactures titanium and aluminum tennis
racquets. Reynoso’s total overhead costs consist of assembly costs and
inspection costs. The following information is available:
Cost Titanium Aluminum Total Cost
Assembly 500 mach. hours 500 mach. hours $60,000
Inspections 350 150 $100,000
2,100 labor hours 1,900 labor hours
Reynoso is considering switching from one overhead rate based on labor
hours to activity-based costing.
Using activity-based costing, how much assembly cost is assigned to
titanium racquets
Question 2
Boswell Company manufactures two products, Regular and Supreme.
Boswell’s overhead costs consist of machining, $3,000,000; and
assembling, $1,500,000. Information on the two products is:
Regular Supreme
Direct labor hours 10,000 15,000
Machine hours 10,000 30,000
Number of parts 90,000 160,000
Overhead applied to Regular using activity-based costing is
Question 3
Which best describes the flow of overhead costs in an activity-based
costing system?