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

Factory security and assembly activities at an appliance manufacturing plant would be best classified as unit-level, batch-level, product-level, or organization-sustaining activities?

Angara Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system: The activity rate for the batch setup activity cost pool is closest to:

Scholfield 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 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 Scholfield Enterprises sells for $15.60 per unit. Last year Latif Corporation ordered a total of 1,100 units of this product in 2 orders. To fill the orders, 7 batches were required. The direct materials cost is $7.85 per unit and the direct labor cost is $1.90 per unit. Each unit requires 0.10 direct labor-hours.According to the activity-based costing system, the total overhead cost for this customer this past year was closest to:

Roediger 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 total cost assigned to Customer R would be closest to:

In the second-stage allocation in activity-based costing, costs that were not allocated in the first stage are assigned to the company's most profitable products.

Clenney Corporation uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to the four activity cost pools shown below. Required: a. Under the proposedABC system, what is the activity rate for the Machining activity cost pool? b. Under the proposedABC system, what is the activity rate for the Machine Setups activity cost pool? c. Under the proposedABC system, what is the activity rate for the Product Design activity cost pool? d. Under the proposedABC system, what is the activity rate for the Order size activity cost pool?

Nissley Wedding Fantasy Corporation makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity rates in its activity-based costing system: The measure of activity for the size-related activity cost pool is the number of planned guests at the wedding reception. The greater the number of guests, the larger the cake. The measure of complexity is the number of tiers in the cake. The activity measure for the order-related cost pool is the number of orders. (Each wedding involves one order.) 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 $559.17 for the Twersky wedding cake, what would be the overall margin on the order?

The following data have been provided by Letze Corporation from its activity-based costing accounting system: Distribution of Resource Consumption across Activity Cost Pools: The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products.How much factory supervision and indirect factory labor cost would be assigned to the Batch Set-Up activity cost pool?

Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment depreciation and supervisory expense--to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Distribution of Resource Consumption Across Activity Cost Pools: In the second stage, 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: Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.Sales and Direct Cost Data: How much overhead cost is allocated to the Machining activity cost pool under activity-based costing in the first stage of allocation?

Pierceall 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: The cost per minute of the resource supplied is $0.42.On the Customer Cost Analysis report in time-driven activity-based costing, the time-driven activity rate for Preparing Change Orders would be closest to:

Scheuer Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment expense and indirect labor--to three activity cost pools--Processing, Supervising, and Other--based on resource consumption. Data to perform these allocations appear below: Distribution of Resource Consumption Across Activity Cost Pools: In the second stage, 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, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.Sales and Direct Cost Data: The activity rate for the Processing activity cost pool under activity-based costing is closest to:

Brester 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: Required: a. Prepare a time-driven activity-based costing Customer Cost Analysis report that determines the total Order Fulfillment Department cost assigned to each customer. b. Prepare a time-driven activity-based costing Capacity Analysis report for the Order Fulfillment Department that determines the impact on expenses of matching capacity with demand.

In time-based activity-based costing, the practical capacity percentage is an estimate of the company's capacity in relation to its closest competitor.

Abel Corporation uses activity-based costing. The company makes two products: Product A and Product B. The annual production and sales of Product A is 370 units and of Product B is 740 units. There are three activity cost pools, with total cost and activity as follows: The activity rate for Activity 2 is closest to:

A duration driver provides a simple count of the number of times that an activity occurs.

Meester Corporation has an activity-based costing system with three activity cost pools--Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Distribution of Resource Consumption Across Activity Cost Pools: 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 for the company's two products follow:Activity: What is the overhead cost assigned to Product H2 under activity-based costing?

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 P would be closest to:

Gauch 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: The cost per minute of the resource supplied is $0.40. On the Customer Cost Analysis report in time-driven activity-based costing, the Receiving Calls cost assigned to Customer O would be closest to:

Lysiak Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment depreciation and supervisory expense-are allocated to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Distribution of Resource Consumption Across Activity Cost Pools: In the second stage, 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 for the company's two products follow:Activity: How much overhead cost is allocated to the Machining activity cost pool under activity-based costing in the first stage of allocation?

Lopresto 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: On the Customer Cost Analysis report in time-driven activity-based costing, the time-driven activity rate for Handling Returns would be closest to: