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

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 $1.33 per guest. (The greater the number of guests, the larger the cake.) The activity rate for the Complexity-Related cost pool is $35.93 per tier. (Cakes with more tiers are more complex.) Finally, the activity rate for the Order-Related activity cost pool is $87.14 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 $988.25 for the Haupt wedding cake, what would be the overall margin on the order?

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: How much overhead cost is allocated to the Order Filling activity cost pool under activity-based costing?

A traditional cost system is generally easier to set up and run than an activity-based costing system.

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 number of employees" 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 A would be closest to:

Rohn 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 each customer. 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.

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

In a Capacity Analysis report in time-based activity-based costing, the unused capacity in minutes is computed by subtracting the total minutes used to meet demand from the total minutes available to meet demand.

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 cost per minute of the resource supplied would be closest to:

Callum 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:

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 Customer Support activity cost pool?

Torello Corporation manufactures two products: Product H95V and Product V93N. The company 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 four cost pools. The following additional information is available for the company as a whole and for Products H95V and V93N. Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product V93N?

Dobles Corporation has provided the following data from its activity-based costing system: The company makes 420 units of product D28K a year, requiring a total of 460 machine-hours, 80 orders, and 10 inspection-hours per year. The product's direct materials cost is $48.96 per unit and its direct labor cost is $25.36 per unit.According to the activity-based costing system, the average cost of product D28K is closest to:

In the second-stage allocation in activity-based costing, activity rates are used to apply overhead costs to products and customers.

Mccluer 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 Routing Calls would be closest to:

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

Jarvis 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 Customer X.

Dercole 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: Machining, $43,200; Order Filling, $13,900; and Other, $14,900. 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: The activity rate for the Machining activity cost pool under activity-based costing is closest to:

Tomasini Corporation has provided the following data 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 supervisory wages and factory supplies cost would be assigned to the Batch Processing activity cost pool?

Chuong 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: