In this section, please choose one best answer based on the problem below: All Loved Co. has identified following overhead activities, costs and activity drivers for the coming year: Machine set up

In this section, please choose one best answer based on the problem below:

All Loved Co. has identified following overhead activities, costs and activity drivers for the coming year:

Machine set up cost

25.500.000

Machine hours

25.500

Machine running costs

64.620.000

Production runs

100

Purchasing costs

33.560.000

Purchase order

200

Delivery costs

54.320.000

deliveries

140

All Loved produced two models of pillow: Cushy and Fluffy with the following expected data:

Cushy

Fluffy

Selling Price/unit

Rp. 15.000

Rp. 13.000

Raw Material usage/unit

2.8 unit

1 unit

Direct labour hours/unit

0.6 hour

0.5 hour

Machine hours/unit

0.5 hour

0.7 hour

Number of production run/year

16

12

Number of purchase order/year

24

28

Number of delivery/year

48

30

Production volume/year

15.000 units

12.000 units

The company normal activity is 22.250 direct labour hours. Raw material cost per unit is Rp. 1.200 and the direct labour rate per hour is Rp. 14.800.

1.      The plantwide overhead rate for the company using direct labour hour as the driver is:

a.       Rp. 6980

b.      Rp. 8000

c.       Rp. 9680

d.      Rp. 16.000

e.       Rp. 16.980

2.      Calculate the unit cost for Cushy product with traditional costing using direct labour hour to apply overhead cost:

a.       Rp. 15.840

b.      Rp. 14.139

c.       Rp.16.431

d.      Rp.15.067

e.       Rp. 12.600

3.      Calculate the unit cost for Cushy product with activity-based costing.

a.       Rp. 15.840

b.      Rp. 14.139

c.       Rp.16.431

d.      Rp.15.067

e.       Rp. 12.600

4.      For Cushy product calculating unit cost with traditional costing is more beneficial compared to using activity-based costing. This statement is:

a.       True, because traditional costing provides lower unit cost.

b.      True, because traditional costing is the correct way to calculate unit cost.

c.       False, because activity-based costing is the only way to calculate unit cost.

d.      False, because activity-based costing provides lower and more accurate unit cost.

e.       Either true or false, because both traditional and activity-based costing are not commonly used in cost accounting.

5.      Calculate the total cost for Fluffy product for the year with the traditional costing using direct labour hour to apply overhead cost:

a.       Rp. 237.600.000

b.      Rp. 151.200.000

c.       Rp. 135.692.800

d.      Rp.241.073.200

e.       Rp. 212.090.400

6.      Calculate total cost for Fluffy product for the year with activity-based costing.

a.       Rp. 237.600.000

b.      Rp. 151.200.000

c.       Rp. 135.692.800

d.      Rp.241.073.200

e.       Rp. 212.090.400

7.      Which product, Cushy or Fluffy has higher profit per unit?

a.       Cushy by Rp. 1692 when using activity-based costing

b.      Cushy by Rp. 1692 when using traditional costing

c.       Fluffy by Rp. 1692 when using activity-based costing

d.      Fluffy by Rp. 1692 when using traditional costing

e.       None of the options is correct.

8.      The total prime cost of Cushy product are as follows, except:

a.       Rp. 171.600.000

b.      Its direct material plus its direct labour costs.

c.       Its total production cost minus its overhead costs

d.      (Rp. 1.200 + Rp. 14.800) X 13.000.

e.       Higher than the total prime cost of Fluffy product.

9.      Why activity-based costing?

a.       Using plantwide or departmental overhead rate may not result in accurate costing.

b.      Production is about activity

c.       Not every activity will result in cost

d.      Costing is so unpredictable

e.       Costing is an impossible activity to measure.

10.  Ways to apply overhead cost to production cost:

a.       Using plantwide rate, departmental rate and activity-based rate

b.      Using budgeted OH, plantwide rate and activity-based rate

c.       Using budgeted OH, direct labour rate and machine hour rate

d.      Using plantwide rate and departmental rate

e.       None of the options are correct.

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