Exam 6: Activity-Based Costing: a Tool to Aid Decision Making

Groch 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. -The activity rate for the Supervising activity cost pool under activity-based costing is closest to:

Activity rates from Quattrone Corporation's activity-based costing system are listed below.The company uses the activity rates to assign overhead costs to products: Last year,Product F76D involved 2 customer orders,434 assembly hours,and 20 batches.How much overhead cost would be assigned to Product F76D using the activity-based costing system?

In activity-based costing,there are a number of activity cost pools,each of which is allocated to products and other costing objects using its own unique measure of activity.

Property taxes are an example of a cost that would be considered to be:

Abraham Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 200 units and of Product B is 1,000 units. There are three activity cost pools, with total costs and activity as follows: -The activity rate for Activity 2 is closest to:

Austad Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system: -The total amount of overhead cost allocated to Product $\times$ would be closest to:

Kozloff Wedding Fantasy Company 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 the company charges $613.98 for the Manliguis wedding cake,what would be the overall margin on the order?

Bevard 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 $0.96 per guest. (The greater the number of guests, the larger the cake.) The activity rate for the Complexity-Related cost pool is $28.92 per tier. (Cakes with more tiers are more complex.) Finally, the activity rate for the Order-Related activity cost pool is $78.19 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 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 Euertz wedding cake to just break even?

Bevard 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 $0.96 per guest. (The greater the number of guests, the larger the cake.) The activity rate for the Complexity-Related cost pool is $28.92 per tier. (Cakes with more tiers are more complex.) Finally, the activity rate for the Order-Related activity cost pool is $78.19 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 $534.11 for the Sparacio wedding cake,what would be the overall margin on the order?

Fogle Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs and its activity based costing system: The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The amount of activity for the year is as follows: -What would be the total overhead cost per bouquet according to the activity based costing system? In other words,what would be the overall activity rate for the making bouquets activity cost pool? (Round to the nearest whole cent. )

The following data have been provided by Kelch Corporation from its activity-based costing accounting system: Distribution of Resource Consumption across Activity Cost Pools: 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?

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:

The costs of a particular department should not be split up among activity cost pools in an activity-based costing system.

Dillner Company 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,should NOT be allocated to orders and products in the second stage of the allocation process if the activity-based costing system is used for internal decision-making?

Laningham Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs-equipment depreciation and supervisory expense-are allocated to three activity cost pools-Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below: In the second stage, 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: -What is the overhead cost assigned to Product H4 under activity-based costing?

Data concerning three of the activity cost pools of Burlingame LLC,a legal firm,have been provided below: The activity rate for the "meeting with clients" activity cost pool is closest to:

Mccance 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 $28,000 for the Machining cost pool,$13,800 for the Setting Up cost pool,and $27,200 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 and the company's costs 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. c.Determine the product margins for each product using activity-based costing.

Goold 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 R9 under activity-based costing?

Tadlock Corporation has provided the following data concerning its overhead costs for the coming year: The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year: The Other activity cost pool does not have a measure of activity;it is used to accumulate costs of idle capacity and organization-sustaining costs. The distribution of resource consumption across activity cost pools is given below: The activity rate for the Order Processing activity cost pool is closest to:

Traughber 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?