11) In 2012, Alan’s Seafood Supply Manufacturing uses machine-hours as the only overhead cost-allocation base. The accountant reported the following information:

EstimatedActual

Manufacturing overhead costs$225,000$250,000

Machine-hours50,00055,000

Using job costing, compute the 2012 actual indirect cost rate.

A) $3.85 per machine hour

B) $3.95 per machine hour

C) $4.45 per machine hour

D) $4.54 per machine hour

E) $4.85 per machine hour

12) The Operations Manager at Mary’s Pastry Shoppe requested a machine shop to build a special pastry machine to add extra jellies and sprinkles on their pastries. Mary estimated that the actual annual indirect-costs to make pastries in the new machine are $6,000 and the actual annual quantity of the cost-allocation base is 2,000. Compute the actual indirect-cost rate.

A) $1

B) $2

C) $3

D) $4

E) $5

13) The Meredith Company reported the following information.

Required:

Compute the Variable Indirect Cost Rate per Direct Professional Labor-Hour.

A) $2.00; $.80

B) $14.70; $1.11

C) $147; $111

D) $53,400; $1,111

E) $60,000; 1,111.11

14) The Meredith Company reported the following information:

Required:

Compute the Fixed Indirect Cost rate per Direct Professional-Labor Hour.

A) $2.58; $.70.

B) $20.58; $77.77

C) $200.58; $79.77

D) $2,000.58; $777.77

E) $2,058.00; $779.77

15) The Meredith Company reported the following information:

Required: Compute the Total Allocation Rate per Direct Professional Labor-Hour.

A) $3.52; $8.88

B) -$35.29; $88.88

C) $352.90; 888.88

D) $3,529.90; $8,888.88

E) $35,299.90; $88,888.88

16) The Frame Shoppe reported that fixed costs remain constant at $450,000 per month. During high-output months variable costs are $315,000, and during the low-output months variable costs are $60,000. What are the high and low indirect-cost rates if budgeted professional labor-hours are 15,000 for high-output months and 1,857 for low-output months?

Required:

Compute the budgeted indirect cost rate for the high-output month and the low-output month.

A) $51 per hour ;$201 per hour

B) $60 per hour;$206 per hour

C) $80 per hour;$210 per hour

D) $85 per hour;$215 per hour

E) $90 per hour;$220 per hour

17) Which of the following describes how managers compute the actual indirect-cost rate?

A) Add actual total indirect costs in the pool to the actual total quantity of the cost-allocation base.

B) Divide actual total indirect costs in the pool by the actual total quantity of the cost-allocation base.

C) Multiply actual indirect costs in the pool by the actual total quantity of the cost-allocation base

D) Subtract actual direct costs in the pool from the actual total quality of the cost-allocation base

E) Subtract actual indirect costs in the pool from the actual quantity of the cost-allocation base

18) Explain why the time-frame is important to managers that implement decisions about indirect-cost rates.

The denominator reason (quantity of the cost-allocation base) is the second reason why managers should consider the time frame associated with their decision to compute indirect-cost rates. Managers must avoid spreading the monthly fixed indirect costs over fluctuating levels of monthly output and fluctuation quantities of the cost-allocation base.