Exam 5: Activity-Based Costing and Activity-Based Management

Aunt Ethel's Fancy Cookie Company manufactures and sells three flavors of cookies: Macaroon,Sugar,and Buttercream.The batch size for the cookies is limited to 1,000 cookies based on the size of the ovens and cookie molds owned by the company.Based on budgetary projections,the information listed below is available: PER UNIT data: Hours per 1000-unit batch: Total overhead costs and activity levels for the year are estimated as follows: Required: a.Determine the activity-cost-driver rate for packaging costs. b.Using the ABC system,for the sugar cookie: c.Using a traditional system (with direct labor hours as the overhead allocation base),for the sugar cookie:. d.Explain the difference between the profits obtained from the traditional system and the ABC system.Which system provides a better estimate of profitability? Why?

Velshi Printers has contracts to complete weekly supplements required by forty-six customers.For the year 2018,manufacturing overhead cost estimates total $1,760,000 for an annual production capacity of 16 million pages. For 2018 Velshi Printers has decided to evaluate the use of additional cost pools.After analyzing manufacturing overhead costs,it was determined that number of design changes,setups,and inspections are the primary manufacturing overhead cost drivers.The following information was gathered during the analysis: During 2018,two customers,Money Managers and Hospital Systems,are expected to use the following printing services: Assuming activity-cost pools are used,what are the activity-cost driver rates for design changes,setups,and inspections cost pools?

High Traffic Products Corporation has two departments,Small and Large.Central costs could be allocated to the two departments in various ways. If total payroll processing costs of $64,680 are allocated on the basis of number of employees,the amount allocated to the Large Department would be ________.(Do not round interim calculations.Round the final answer to the nearest whole dollar. )

North Street Corporation manufactures two models of motorized go-carts,a standard and a deluxe model.The following activity and cost information has been compiled: Number of setups and number of components are identified as activity-cost drivers for overhead.Assuming an activity-based costing system is used,what is the total amount of overhead cost assigned to the standard model? (Do not round interim calculations.Round the final answer to the nearest whole dollar. )

Answer the following questions using the information below: Eagle Eye Company produces two types of lenses-L7 and L9. What is the total costs assigned to L9 (b)under single indirect-cost pool system?

Which of the following statements is true of ABC systems?

High Traffic Products Corporation has two departments,Small and Large.Central costs could be allocated to the two departments in various ways. If total rent expense of $144,300 is allocated on the basis of square footage,the amount allocated to the Large Department would be ________.(Do not round interim calculations.Round the final answer to the nearest whole dollar. )

Which of the following has accelerated need for refined cost systems?

Management accountants use the cost hierarchy to first calculate the ________.

Given this change in the cost ________.

Top management compensation cost is an example of ________ in the cost hierarchy.

Comfort Corporation manufactures two models of office chairs,a standard and a deluxe model.The following activity and cost information has been compiled: Assume a traditional costing system applies the overhead costs based on direct labor hours.What is the total amount of overhead costs assigned to the standard model? (Do not round interim calculations.Round the final answer to the nearest whole dollar. )

Answer the following questions using the information below: Eagle Eye Company produces two types of lenses-L7 and L9. What is the total indirect costs (a)under ABC system?

Velshi Printers has contracts to complete weekly supplements required by forty-six customers.For the year 2018,manufacturing overhead cost estimates total $1,800,000 for an annual production capacity of 20 million pages. For 2018 Velshi Printers has decided to evaluate the use of additional cost pools.After analyzing manufacturing overhead costs,it was determined that number of design changes,setups,and inspections are the primary manufacturing overhead cost drivers.The following information was gathered during the analysis: During 2018,two customers,Money Managers and Hospital Systems,are expected to use the following printing services: Using the three cost pools to allocate overhead costs,what is the total manufacturing overhead cost estimate for Money Managers during 2018? (Do not round interim calculations.Round the final answer to the nearest cent. )

One reason for assigning selling and distribution costs to products for analytical purposes is ________.

Modern manufacturing practices have helped reduce overhead costs relative to direct costs as the reliance on support resources such as scheduling,design,and engineering has diminished.

Extreme Manufacturing Company provides the following ABC costing information: The above activities are used by Departments A and B as follows: How much of the total costs will be assigned to Department B?

Which of the following ordering of the levels best depicts the cost hierarchy within an ABC system?

Companies that overcost products risk becoming less effective on pricing and losing market share when competition utilizes more accurate cost systems.

Refining a cost system involves which of the following?