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Hello A71 friends,
I am really stuck at this topic,somehow I am not able to understand and solve any MCQ’s on this topic..I know the theory but no idea on MCQ.
Question CPA-03959
Zeta Company is preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the information given below.
Units produced Wall Mirrors – 25 || Specialty Windows 25
Material moves per product line Wall Mirrors – 5 || Specialty Windows-15
Direct labor hours per unit Wall Mirrors- 200 || Specialty Windows-200
Budgeted materials handling costs $50,000
Under a costing system that allocates overhead on the basis of direct labor hours, the materials handling costs allocated to one unit of wall mirrors would be:
a. $1,000
b. $500
c. $2,000
d. $5,000
Explanation
Choice “a” is correct. $1,000.
Wall mirrors – 25 units x 200 hours per unit =5,000 hours
Specialty windows – 25 units x 200 hours per unit= 5,000 hours
Total hours 10,000 hours
Budgeted materials handling costs $50,000
Divided by total hours ÷10,000
Materials handling cost per hour $ 5
Hours per unit x 200
Costs allocated to one unit $ 1,000.
Also given same information how would you calculate under Activity Based Costing Method?
Does anyone know how to start/trick for solving them.I dont want to memorize them but understand.
Any Explanation/input would be really appreciative 🙂
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