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# ACCT 344 Week 3 Homework Questions Chapter 4 & 12

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Problem 1: (10 pts) Essay style within Homework ES Alliance Company manufactures two products (Brushes and Combs). The overhead costs have been divided into four cost pools that use the following activity drivers: # of Setups # of Orders Machine Hours Packing Orders Brushes 30 35 2000 100 Combs 10 65 6000 150 Cost per Pool \$ 20,000 \$ 10,000 \$ 280,000 \$ 60,000 Required: a. Compute the allocation rates for each of the activity drivers listed. b. Allocate the overhead costs to Brushes and Combs using activity-based costing. c. Compute the overhead rate using machine hours under the functional-based costing system. d. Allocate the overhead costs to Brushes and Combs using the functional-based costing system overhead rate calculated in part (c). Problem 2: (10 pts) Essay style within Homework ES Sales volume averages 4000 units per year. Current Sales Price is \$60. Recently, its main competitor reduced the price of its product to \$48. Maximum expects sales to drop dramitically unless it matches the competitor's price. In addition, the current profit per unit must be maintained. Information about the product (for production of 4000) is as follows:

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Problem 1: (10 pts) Essay style within Homework ES Alliance Company manufactures two products (Brushes and Combs). The overhead costs have been divided into four cost pools that use the following activity drivers: # of Setups # of Orders Machine Hours Packing Orders Brushes 30 35 2000 100 Combs 10 65 6000 150 Cost per Pool \$ 20,000 \$ 10,000 \$ 280,000 \$ 60,000 Required: a. Compute the allocation rates for each of the activity drivers listed. b. Allocate the overhead costs to Brushes and Combs using activity-based costing. c. Compute the overhead rate using machine hours under the functional-based costing system. d. Allocate the overhead costs to Brushes and Combs using the functional-based costing system overhead rate calculated in part (c). Problem 2: (10 pts) Essay style within Homework ES Sales volume averages 4000 units per year. Current Sales Price is \$60. Recently, its main competitor reduced the price of its product to \$48. Maximum expects sales to drop dramitically unless it matches the competitor's price. In addition, the current profit per unit must be maintained. Information about the product (for production of 4000) is as follows:

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