Exam 5: Activity-Based-Costing: a Tool to Aid Decision Making

Demora Corporation's activity-based costing system has three activity cost pools-Fabricating, Setting Up, and Other. The company's overhead costs have already been allocated to these cost pools as follows: 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 following table shows the machine-hours and number of batches associated with each of the company's two products: Required: Calculate activity rates for each activity cost pool using activity-based costing.

Mckenrick 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: How much cost, in total, would be allocated in the first-stage allocation to the Setting Up activity cost pool?

The activity rate for Machining under activity-based costing is closest to:

How much indirect factory wages and factory equipment depreciation cost would NOT be assigned to products using the activity-based costing system?

An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because:

What is the overhead cost assigned to Product B6 under activity-based costing?

Higbie 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?

What is the overhead cost assigned to Product S5 under activity-based costing?

What is the product margin for Product C6 under activity-based costing?

How much factory supervision and indirect factory labor cost would be assigned to the Batch Set-Up activity cost pool?

The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:

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

Alongi Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products. Last year, Product P91M involved 33 batches, 1 customer order, and 368 assembly hours. Required: How much overhead cost would be assigned to Product P91M using the company's activity-based costing system? Show your work!

How much overhead cost is allocated to the Machining activity cost pool under activity-based costing in the first stage of allocation?

Gaucher Corporation has provided the following data from its activity-based costing accounting system: The activity rate for the "designing products" activity cost pool is closest to:

Irie Corporation has an activity-based costing system with three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs have already been allocated to the cost pools and total $18,900 for the Machining cost pool, $20,500 for the Setting Up cost pool, and $23,600 for the Other cost pool. 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. Data concerning the two products appear below: Required: a. Calculate activity rates for each activity cost pool using activity-based costing. b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

How much overhead cost is allocated to the Processing activity cost pool under activity-based costing in the first stage of allocation?

Roskam Housecleaning provides housecleaning services to its clients. The company uses an activity-based costing system for its overhead costs. The company has provided the following data from its activity-based costing system. The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. One particular client, the Haan family, requested 49 jobs during the year that required a total of 245 hours of housecleaning. For this service, the client was charged $2,500. Required: a. Compute the activity rates (i.e., cost per unit of activity) for the activity cost pools. Round off all calculations to the nearest whole cent. b. Using the activity-based costing system, compute the customer margin for the Haan family. Round off all calculations to the nearest whole cent. c. Assume the company decides instead to use a traditional costing system in which ALL costs are allocated to customers on the basis of cleaning hours. Compute the margin for the Haan family. Round off all calculations to the nearest whole cent.

If the materials handling cost is allocated on the basis of direct labor-hours, how much of the total materials handling cost would be allocated to the prefab barns? (Round off your answer to the nearest whole dollar.)

How much supervisory wages and factory supplies cost would be assigned to the Batch Processing activity cost pool?