Exam 7: Activity-Based Costing: a Tool to Aid Decision Making

Hagy Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Data concerning the company's costs and activity-based costing system appear below: Distribution of Resource Consumption Across Activity Cost Pools Required:Assign overhead costs to activity cost pools using activity-based costing.

Meli Corporation manufactures two products: Product L61P and Product B60E. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products L61P and B60E. Using the plantwide overhead rate, the percentage of the total overhead cost that is allocated to Product B60E is closest to:

Sukhu Corporation's activity-based costing system has three activity cost pools--Fabricating, Setting Up, and Other. The company's overhead costs have already been allocated to these cost pools as follows: Costs in the Fabricating cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. The following table shows the machine-hours and number of batches associated with each of the company's two products: Required:Calculate activity rates for each activity cost pool using activity-based costing

Managing and sustaining product diversity requires many more overhead resources such as production schedulers and product design engineers than managing and sustaining a single product. The costs of these resources can be accurately allocated to products using activity-based costing than traditional costing which is based entirely on direct labor-hours.

Deninno Corporation is conducting a time-driven activity-based costing study in its Tech Support Department. The company has provided the following data to aid in that study: On the Capacity Analysis report in time-driven activity-based costing, the "unused capacity in minutes" would be closest to:

Bachrodt Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below: Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins. What is the product margin for Product Y7 under activity-based costing?

Data concerning three of the activity cost pools of Salcido LLC, a legal firm, have been provided below: The activity rate for the "meeting with clients" activity cost pool is closest to:

Ploof Corporation is conducting a time-driven activity-based costing study in its Customer Service Department. The company has provided the following data to aid in that study: On the Capacity Analysis report in time-driven activity-based costing, the "impact on expenses of matching capacity with demand" would be closest to:

Cambra Corporation manufactures two products: Product N70E and Product F54Y. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products N70E and F54Y. Using the ABC system, the percentage of the total overhead cost that is assigned to Product F54Y is closest to:

The controller of Hendershot Corporation estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below: The total materials handling cost for the year is expected to be $16,652.90.If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the wall mirrors is closest to: (Round your intermediate calculationsto 4 decimal places.)

Data concerning three of the activity cost pools of Salcido LLC, a legal firm, have been provided below: The activity rate for the "meeting with clients" activity cost pool is closest to:

Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below: Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins. What is the product margin for Product M5 under activity-based costing?

Lemaire Corporation is conducting a time-driven activity-based costing study in its Customer Support Department. The company has provided the following data to aid in that study: On the Capacity Analysis report in time-driven activity-based costing, the "unused capacity in minutes" would be closest to:

The controller of Hendershot Corporation estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below: The total materials handling cost for the year is expected to be $6,123.60.If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the wall mirrors is closest to: (Do not round your intermediate calculations.)

Imbesi Corporation is conducting a time-driven activity-based costing study in its Customer Service Department. The company has provided the following data to aid in that study: The cost per minute of the resource supplied is $0.36 On the Customer Cost Analysis report in time-driven activity-based costing, the total cost assigned to Customer R would be closest to:

Deemer Corporation has an activity-based costing system with three activity cost pools--Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Distribution of Resource Consumption Across Activity Cost Pools: Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:Activity: The activity rate for the Supervising activity cost pool under activity-based costing is closest to:

Wrench Corporation is conducting a time-driven activity-based costing study in its Customer Support Department. The company has provided the following data to aid in that study: On the Capacity Analysis report in time-driven activity-based costing, the "potential adjustment in the number of employees" would be closest to:

Tullio Corporation is conducting a time-driven activity-based costing study in its Tech Support Department. The company has provided the following data to aid in that study: On the Capacity Analysis report in time-driven activity-based costing, the "potential adjustment in the number of employees" would be closest to:

Choi Corporation is conducting a time-driven activity-based costing study in its Order Fulfillment Department. The company has provided the following data to aid in that study: The cost per minute of the resource supplied is $0.40.On the Customer Cost Analysis report in time-driven activity-based costing, the Preparing Deliveries cost assigned to Customer Q would be closest to:

Flemming Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Machining, Order Filling, and Other. The costs in those activity cost pools appear below: Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins. What is the overhead cost assigned to Product U6 under activity-based costing?