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

Huelskamp Corporation has provided the following data concerning its overhead costs for the coming year: The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year: The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of idle capacity and organization-sustaining costs.The distribution of resource consumption across activity cost pools is given below: The activity rate for the Assembly activity cost pool is 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: What is the overhead cost assigned to Product Q1 under activity-based costing?

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 total amount of overhead cost allocated to Product X would be closest to:

Lindenmuth 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 total cost assigned to Customer B would be closest to:

Lakatos 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 Fabricating activity cost pool?

Garrell 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: Using time-driven activity-based costing, determine the total Customer Support Department cost assigned to each customer.

Unit-level activities are performed each time a batch is handled or processed.

Digerolamo 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, $1,159.00 per customer, is the cost of serving a customer for one year.Carlacci Corporation buys only one of the company's products which Digerolamo Enterprises sells for $18.85 per unit. Last year Carlacci Corporation ordered a total of 1,500 units of this product in 4 orders. To fill the orders, 9 batches were required. The direct materials cost is $8.15 per unit and the direct labor cost is $2.60 per unit. Each unit requires 0.15 DLHs.According to the ABC system, the total cost of the activity "Processing batches" for this customer this past year was closest to:

Taft 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: Required: a. Prepare a time-driven activity-based costing Customer Cost Analysis report that determines the total Tech Support Department cost assigned to Customer J. b. Prepare a time-driven activity-based costing Capacity Analysis report for the Tech Support Department that determines the impact on expenses of matching capacity with demand.

Jahnel 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 Customer Cost Analysis report in time-driven activity-based costing, the time-driven activity rate for Preparing Change Orders would be closest to:

Provenzano Corporation manufactures two products: Product B56Z and Product D32N. 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 B56Z and D32N. What is the activity rate for the Machine Setups activity cost pool?

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 material moves, the total materials handling cost allocated to the specialty windows is closest to: (Do not round your intermediate calculations.)

Ciulla Corporation manufactures two products: Product J12N and Product H63J. The company is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products J12N and H63J. Required:a. Using theactivity-based costing system, how much total manufacturing overhead cost would be assigned to Product H63J?b. Using theactivity-based costing system, what percentage of the total overhead cost is assigned to Product J12N?

Mcinture 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 thatactivity-based costing system are listed below: The cost of serving customers, $2,334.00 per customer, is the cost of serving a customer for one year. Schwerin Corporation buys only one of the company's products which Mcinture Enterprises sells for $28.40 per unit. Last year Schwerin Corporation ordered a total of 1,100 units of this product in 2 orders. To fill the orders, 6 batches were required. The direct materials cost is $8.40 per unit and the direct labor cost is $1.80 per unit. Each unit requires 0.10 direct labor-hours. Required:What is the customer margin on sales to Schwerin Corporation for the year?

Batch-level activities are performed each time a unit is produced.

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 M 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: The activity rate for the Machining activity cost pool under activity-based costing is closest to:

An activity rate of $512 per product design means that on average a product design consumes resources that cost $512.

Jahnel 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 Customer Cost Analysis report in time-driven activity-based costing, the cost per minute of the resource supplied would be closest to:

Wedd Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Processing, $27,200; Supervising, $9,300; and Other, $9,500. 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: The activity rate for the Processing activity cost pool under activity-based costing is closest to: