Which of the following statements are true concerning the pr

Which of the following statements are true concerning the predetermined overhead rate when the direct labor-hour requirement for the Deluxe model dropped from 5 hours to 2 hours? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

  

Which of the following statements are true concerning the unit product costs for the Tourist model when the direct labor-hour requirement for the Deluxe model drops from 5 hours to 2 hours? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

  

Change the direct labor-hour requirement for the Deluxe model back to 5 hours in cell B10. Assume that the production orders change so that the Deluxe model Will have 220 orders in cell C19 and the Tourist model will have 280 orders in cell D19. The Data area should now look like this:

  

What is the traditional unit product cost for the Deluxe model after this change?

  

      

Which of the following statements are true? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

  

What is the ABC unit product cost for the Deluxe model after this change? (Round your intermediate calculations and final answer to 2 decimal places.)

  

      

Which of the following statements are true concerning the effects of the change in production orders on the ABC unit product costs? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

Change the data in your worksheet so that it matches the following:

    

What is the traditional unit product cost for the Deluxe model now? (Round your intermediate calculations and final answer to 2 decimal places.)

    

     

What is the traditional unit product cost for the Tourist model? (Round your intermediate calculations and final answer to 2 decimal places.)

    

     

What is the ABC unit product cost for the Deluxe model? (Round your intermediate calculations and final answer to 2 decimal places.)

    

      

What is the ABC unit product cost for the Tourist model? (Round your intermediate calculations and final answer to 2 decimal places.)

    

     

Requirement 1:

6 Data 7 8 Annual sales in units 9 Direct materials per unit 10 Direct labor-hours per unit Deluxe Tourist 2,00010,000 $17 4 $25 $12 per DLH 12 Direct labor rate 13 Estimated OverheadExpected Activity 15 16 Activities and Activity Measures 17 Labor related (direct labor-hours)80,000 10,000 40,000 50,000 18 Machine setups (setups) 19 Production orders (orders) 20 General factory (machine-hours) 21 CostDeluxeTouristTotal 150,0003,0002,0005,000 500 250,000 12,000 28,00040,000 70,000 220 280 $550,000

Solution

Solution - Requirement 1:

a) If direct labor hour requirement for deluxe model decreased from 5 hours to 2 hours then estimated number of direct labor hours will be reduced. However fixed manufacturing overhead always remain the same. In such scenario, pre determined overhead will be derived by dividend fixed manufacturing overhead by decreased number of direct labor hours, hence pre-determined overhead rate will be increased.

Therefore last statment is true i.e. \"The predetermined overhead rate increased because the total direct labor-hours dropped.\"

b) If direct labor hours of deluxe model reduced from 5 hours to 2 hours, then predetermined overhead rate will be increased becuase the total direct labor hours dropped.

Therefore due to increased in pre determined overhead recovery rate, tradiitional unit product cost of tourist model will increased as more overhead will be applied on this model.

Therefore first statement is true, \"The traditional unit product cost of the Tourist model increases when the Deluxe model\'s direct labor-hour requirement decreases.\"