The building maintenance department for Advantage Toys budgets annual costs of $4,200,000 based on the expected operating level for the coming year.The costs are allocated to two production departments.The following data relate to the potential allocation bases: $\begin{array}{lll}& \text { Production Dept. A } & \text { Production Dept. B } \\ \text { Square footage } & 15,000 & 45,000 \\ \text { Direct labor hours } & 25,000 & 50,000 \end{array}$ If Advantage assigns costs to departments based on direct labor hours, how much maintenance cost will be allocated to Production Department B?

A) $1,400,000 B) $1,050,000 C) $2,800,000 D) $2,100,000 A) $1,400,000 B) $1,050,000 C) $2,800,000 D) $2,100,000

Dragon Fire Hot Sauce makes two types of hot sauces-meek and mild.Budgeted information for the two flavors appears below: $\begin{array}{lrr}&\text { Meek }&\text { Mild }\\ \text { Sales } & \$ 600,000 & \$ 400,000 \\ \text { Direct materials } & \$ 100,000 & \$ 120,000 \\ \text { Direct labor cost } & \$ 108,000 & \$ 180,000 \\ \text { Labor hourly cost } & \$ 12,00 & \$ 12,00 \end{array}$ The company estimates it will incur $345,600 in overhead costs for the period.Dragon Fire allocates overhead cost to products based on the labor cost incurred.How much overhead is assigned to Mild?

A) $216,000 B) $28,800 C) $56,250 D) None of these answer choices are correct. A) $216,000 B) $28,800 C) $56,250 D) None of these answer choices are correct.

Fifth Third Bank is a banking services company that offers several different types of checking accounts.The bank has recently adopted an activity-based costing system to assign costs to its checking accounts.The following data relate to the Mind Your Money checking accounts and the ABC cost pools: Annual number of accounts = 60,000 accounts $\begin{array}{lrl}\text { Cost Pool }&\text { Cost }&\text { Cost Drivers }\\ \hline \text { Returned check costs } & \$ 3,000,000 & \text { Number of returned checks } \\ \text { Account reconciliation costs } & 60,000 & \text { Number of account reconciliation requests } \\ \text { New account setup } & 650,000 & \text { Number of new accounts } \\ \text { Archive requests } & 400,000 & \text { Number of archive requests } \\ \text { Web site costs } & 195,000 & \text { Per account type } \\ \text { Total checking account costs } & \$ 4,305,000 & \end{array}$ $\text { Annual activity information related to cost drivers: }$ $\begin{array}{llr}\text { Cost Pool }&\text { All Products }&\text { Mind Your Monev Checking }\\ \hline \text { Returned checks } & 200,000 \text { returned checks } & 18,000 \\ \text { Account reconciliation costs } & 3,000 \text { reconciliation requests } & 420 \\ \text { New account setups } & 60,000 \text { new accounts } & 15,000 \\ \text { Archive requests } & 100,000 \text { archive requests } & 60,000 \\ \text { Web site costs } & 10 \text { types of accounts } & 1 \end{array}$ How much is the rate to be used to allocate account reconciliation cost to each Mind Your Money checking account?

A) $20.00 B) $1.00 C) $0.14 D) $142.85 A) $20.00 B) $1.00 C) $0.14 D) $142.85

Hurst Productions uses activity-based costing.The company produces weekly and monthly magazines.The estimated costs and expected activity for each of the activity pools follow: $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Expected Activity }$ $\begin{array}{|l|c|c|c|c|} \hline \text { Cost Pool } & \begin{array}{c} \text { Estim ated } \\ \text { Cost } \end{array} & \text { Weekly } & \text { Monthly } & \text { Total } \\ \hline \text { Pressing } & \$ 24,600 & 600 & 400 & 1,000 \\ \hline \text { Printing } & 6,250 & 400 & 100 & 500 \\ \hline \text { Binding } & 9,000 & 800 & 1,200 & 2,000 \\ \hline \end{array}$ How much are the total costs to be allocated to monthly magazines?

A) $16,490 B) $41.60 C) $131.50 D) None of these answer choices are correct. A) $16,490 B) $41.60 C) $131.50 D) None of these answer choices are correct.

Ransall Auto Parts has two service departments-maintenance and personnel, and three production departments-fabrication, assembly, and packaging.Service costs are allocated to producing departments using the direct method.Information on overhead in each department and possible allocation bases appear below: $\begin{array}{lrrrrr}&\text { Maintenance}&\text { Personnel }&\text {fabrication }&\text {Assembly }&\text {Packaging }\\ \text { Cost } & \$ 90,000 & \$ 130,000 & & & \\ \text { Machine hours } & & & 12,000 & 30,000 & 18,000 \\ \text { Employees } & 4 & 16 & 24 & 30 & 26 \end{array}$ Using the most logical activity base, how much maintenance cost will be allocated to packaging?

A) $3,600 B) $27,000 C) $33,750 D) $30,000 A) $3,600 B) $27,000 C) $33,750 D) $30,000

The building maintenance department for Advantage Toys budgets annual costs of $4,200,000 based on the expected operating level for the coming year.The costs are allocated to two production departments.The following data relate to the potential allocation bases: $\begin{array}{lll}& \text { Production Dept. A } & \text { Production Dept. B } \\ \text { Square footage } & 15,000 & 45,000 \\ \text { Direct labor hours } & 25,000 & 50,000 \end{array}$ If Advantage assigns costs to departments based on square footage, how much maintenance cost will be allocated to Production Department A?

A) $1,400,000 B) $1,050,000 C) $1,575,000 D) $2,100,000 A) $1,400,000 B) $1,050,000 C) $1,575,000 D) $2,100,000

Rather Bedding makes two types of pillow-down and foam.It is currently implementing an activity-based costing system.In the past, all overhead had been applied on the basis of machine hours.The company produces 6,000 down pillows and 18,000 foam pillows per year. \(\begin{array}{|l|c|c|c|c|} \hline{\text { Cost Pool }} & \begin{array}{c} \text { Driver and } \\ \text { Level } \end{array} & \begin{array}{c} \text { Estim ated } \\ \text { Costs } \end{array} & \begin{array}{c} \text { Use of Driver by } \\ \text { Down Pillows } \end{array} & \begin{array}{c} \text { Use of Driver by } \\ \text { Foam Pillows } \end{array} \\ \hline \text { Equipment setup } & 360 \text { setups } & \$ 216,000 & 120 \text { setups } & 240 \text { setups } \\ \hline \begin{array}{l} \text { Materials } \\ \text { ordering } \end{array} & 6,000 \text { orders } & \$ 60,000 & 2,400 \text { orders } & 3,600 \text { orders } \\ \hline \text { Quality control } & \begin{array}{c} 2,000 \\ \text { inspections } \end{array} & \$ 36,000 & 800 \text { inspections } & 1,200 \text { inspections } \\ \hline \text { Machining } & \begin{array}{c} 8,000 \\ \text { machine } \\ \text { hours } \end{array} & \$ 86,800 & \begin{array}{c} 4,200 \text { machine } \\ \text { hours } \end{array} & \begin{array}{c} 3,800 \text { machine } \\ \text { hours } \end{array} \\ \hline \end{array}\) What is the overhead cost for each down pillow using ABC?

A) $50.00 per down pillow B) $26.00 per down pillow C) $13.49 per down pillow D) $16.67 per down pillow A) $50.00 per down pillow B) $26.00 per down pillow C) $13.49 per down pillow D) $16.67 per down pillow