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

Zumbrunnen 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 H2 under activity-based costing?

Kenrick 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: 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: Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins. How much overhead cost is allocated to the Processing activity cost pool under activity-based costing in the first stage of allocation?

Activity-based management seeks to eliminate waste by allocating costs to products that waste resources.

Radakovich Corporation has provided the following data from its activity-based costing system: The company makes 230 units of product F60N a year, requiring a total of 480 machine-hours, 50 orders, and 30 inspection-hours per year.The product's direct materials cost is $12.70 per unit and its direct labor cost is $45.93 per unit.The product sells for $126.60 per unit. According to the activity-based costing system, the product margin for product F60N is:

Activity rates from Mcelderry Corporation's activity-based costing system are listed below.The company uses the activity rates to assign overhead costs to products: Last year, Product Q06J involved 10 customer orders, 580 assembly hours, and 12 batches.How much overhead cost would be assigned to Product Q06J using the activity-based costing system?

Dideda 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: 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?

The following data have been provided by Graise Corporation 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 factory supervision and indirect factory labor cost would be assigned to the Batch Set-Up activity cost pool?

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

Fife & Jones PLC, a consulting firm, uses an activity-based costing in which there are three activity cost pools.The company has provided the following data concerning its costs and its activity based costing system: Costs: Distribution of resource consumption: Required: a.How much cost, in total, would be allocated to the Working On Engagements activity cost pool? b.How much cost, in total, would be allocated to the Business Development activity cost pool? c.How much cost, in total, would be allocated to the Other activity cost pool?

The controller of Hartis 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 $38, 448. If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the wall mirrors is closest to:

Carsten Wedding Fantasy Corporation makes very elaborate wedding cakes to order.The owner of the company has provided the following data concerning the activity rates in its activity-based costing system: The measure of activity for the size-related activity cost pool is the number of planned guests at the wedding reception.The greater the number of guests, the larger the cake.The measure of complexity is the number of tiers in the cake.The activity measure for the order-related cost pool is the number of orders.(Each wedding involves one order. )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 all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Ruise wedding cake to just break even?

Monson Corporation has two products: G and P.The company uses activity-based costing and has prepared the following analysis showing the total cost and activity for each of its three activity cost pools: The annual production and sales of Product G is 10, 640 units.The annual production and sales of Product P is 26, 600. The activity rate under the activity-based costing system for Activity 2 is closest to:

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

Stroth 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 overhead cost assigned to Product C4 under activity-based costing?

Monson Corporation has two products: G and P.The company uses activity-based costing and has prepared the following analysis showing the total cost and activity for each of its three activity cost pools: The annual production and sales of Product G is 10, 640 units.The annual production and sales of Product P is 26, 600. The cost per unit of Product P under activity-based costing is closest to:

Keske 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 the three activity cost pools based on resource consumption.Data used in the first stage allocations follow: 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: Finally, the costs of Machining and Order Filling are combined with the following sales and direct cost data to determine product margins. The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:

The controller of Hartis 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 $38, 448. 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:

Studler Corporation has an activity-based costing system with three activity cost pools-Processing, Supervising, and Other.In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption.Data used in the first stage allocations follow: 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: How much overhead cost is allocated to the Supervising activity cost pool under activity-based costing?

Kenrick 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: 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: Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins. What is the overhead cost assigned to Product U4 under activity-based costing?

Duckhorn 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 Lumbard family, requested 31 jobs during the year that required a total of 62 hours of housecleaning.For this service, the client was charged $1, 620. 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 Lumbard 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 Lumbard family.Round off all calculations to the nearest whole cent.