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

Howell Corporation's activity-based costing system has three activity cost pools--Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Distribution of Resource Consumption Across Activity Cost Pools 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. Additional data concerning the company's products appears below: Required:a. Assign overhead costs to activity cost pools using activity-based costing. b. Calculate activity rates for each activity cost pool using activity-based costing. c. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. d. Determine the product margins for each product using activity-based costing.

Lamorte 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 Processing Orders cost assigned to Customer X would be closest to:

Orick 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, $2,574.00 per customer, is the cost of serving a customer for one year. Peiffer Corporation buys only one of the company's products. The details of last year's purchases of this product are listed below: Required:a. According to the activity-based costing system, what is the cost of the "Supporting assembly" activity for Peiffer Corporation for the year?b. According to theactivity-based costing system, what is the cost of the "Processing batches" activity for Peiffer Corporation for the year?c. According to theactivity-based costing system, what is the cost of the "Processing orders" activity for Peiffer Corporation for the year?d. According to theactivity-based costing system, what is the cost of the "Servicing customers" activity for Peiffer Corporation for the year?e. What is the customer margin on sales to Peiffer Corporation for the year?

Weimar 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 Capacity Analysis report in time-driven activity-based costing, the "impact on expenses of matching capacity with demand" would be closest to:

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

Mayeux Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system: Distribution of resource consumption: How much cost, in total, would be allocated in the first-stage allocation to the Setting Up activity cost pool?

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?

Handal 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 product margin for Product S1 under activity-based costing?

Bartow Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment expense and indirect labor--are allocated to the 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: The activity rate for the Processing activity cost pool under activity-based costing is closest to:

In an ABC system, departmental managers are typically interviewed to determine how the departmental non-personnel costs should be distributed across the activity cost pools.

Departmental overhead rates may not correctly assign overhead costs due to:

Eccles Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system: Distribution of resource consumption: How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool?

Diehl Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: Distribution of resource consumption: The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.You have been asked to complete the first-stage allocation of costs to the activity cost pools.How much cost, in total, would be allocated in the first-stage allocation to the Order Size activity cost pool?

Mcnamee Corporation's activity-based costing system has three activity cost pools--Fabricating, Setting Up, and Other. 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 activity rate for Fabricating is $0.14 per machine-hour; the activity rate for Setting Up is $3.30 per batch. The following table shows the machine-hours and number of batches associated with each of the company's two products: Required:Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

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 Machining activity cost pool?

Machining a part for a product is an example of a:

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

Weimar 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 Capacity Analysis report in time-driven activity-based costing, the "potential adjustment in the number of employees" would be closest to:

Pilkerton 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, $2,533.00 per customer, is the cost of serving a customer for one year.Christoforou Corporation buys only one of the company's products which Pilkerton Enterprises sells for $21.65 per unit. Last year Christoforou Corporation ordered a total of 1,300 units of this product in 3 orders. To fill the orders, 10 batches were required. The direct materials cost is $6.60 per unit and the direct labor cost is $2.75 per unit. Each unit requires 0.15 Direct labor-hours.According to the ABC system, the total overhead cost for this customer this past year was closest to:

Boiser 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 Capacity Analysis report in time-driven activity-based costing, the "unused capacity in minutes" would be closest to: