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

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 L61P 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 "potential adjustment in the number of employees" would be closest to:

Schlaefer 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 number of employees" would be closest to:

Ledonne 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:

Code 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 Customer Cost Analysis report in time-driven activity-based costing, the Resolving Queries cost assigned to Customer I 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 R would be closest to:

Meade Nuptial Bakery makes very elaborate wedding cakes to order. The company has an activity-based costing system with three activity cost pools. The activity rate for the Size-Related activity cost pool is $1.13 per guest. (The greater the number of guests, the larger the cake.) The activity rate for the Complexity-Related cost pool is $43.52 per tier. (Cakes with more tiers are more complex.) Finally, the activity rate for the Order-Related activity cost pool is $61.44 per order. (Each wedding involves one order for a cake.) The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do not include the costs of purchased decorations such as miniature statues and wedding bells, which are accounted for separately.Data concerning two recent orders appear below: Assuming that the company charges $500.54 for the Haupt wedding cake, what would be the overall margin on the order?

Which of the following would be classified as a product-level activity?

Krueger 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 Customer Cost Analysis report in time-driven activity-based costing, the total cost assigned to Customer U would be closest to:

Organization-sustaining activities are carried out regardless of which customers are served, which products are produced, how many batches are run, or how many units are made.

Fletes Corporation manufactures two products: Product O95C and Product M31N. 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 O95C and M31N. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product O95C?

Musich Corporation has an activity-based costing system with three activity cost pools--Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, have been allocated to the cost pools already and are provided in the table below. Costs in the Machining 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. Data concerning the two products and the company's costs appear below: Required:a. Calculate activity rates for each activity cost pool using activity-based costing. b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. c. Determine the product margins for each product using activity-based costing.

Gendel 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:

Houseal Corporation has provided the following data from its activity-based costing system: Data concerning one of the company's products, Product W58B, appear below: According to the activity-based costing system, the product margin for product W58B is:

Hosley Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs: The distribution of resource consumption across the three activity cost pools is given below: How much cost, in total, would be allocated in the first-stage allocation to the Other activity cost pool?

Larry Enterprises makes a variety of products that it sells to other businesses. The company's activity-based costing system has four activity cost pools for assigning costs to products and customers. Details concerning that ABC system are listed below: The cost of serving customers, $1,913.00 per customer, is the cost of serving a customer for one year. Prosonic Corporation buys only one of the company's products. The details of last year's purchases of this product are listed below: According to the ABC system, the total cost of the activity "Processing batches" for this customer this past year was closest to:

Gumbel 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: Required: Prepare a time-driven activity-based costing Customer Cost Analysis report that determines the total Customer Support Department cost assigned to each customer.

ScholfieldEnterprises makes a variety of products that it sells to other businesses. The company's activity-based costing system has four activity cost pools for assigning costs to products and customers. Details concerning that activity-based costing system are listed below: The cost of serving customers, $1,191.00 per customer, is the cost of serving a customer for one year.Latif Corporation buys only one of the company's products which ScholfieldEnterprises sells for $15.60per unit. Last year Latif Corporation ordered a total of 1,100units of this product in 2orders. To fill the orders, 7batches were required. The direct materials cost is $7.85per unit and the direct labor cost is $1.90per unit. Each unit requires 0.10 direct labor-hours.According to the activity-based costing system, the total cost of the activity "Processing batches" for this customer this past year was closest to:

Leaper Corporation uses an activity-based costing system with the following three activity cost pools: The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs.The company has provided the following data concerning its costs: The distribution of resource consumption across activity cost pools is given below: The activity rate for the Order Processing activity cost pool is closest to:

Addleman 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: Finally, the costs of Processing and Supervising are combined with the following sales and direct cost data to determine product margins.Sales and Direct Cost Data: How much overhead cost is allocated to the Supervising activity cost pool under activity-based costing?