# Solved > 11) In 2012, Alan’s Seafood Supply Manufacturing uses:1852901 …

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

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.

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