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

Loffredo Corporation has provided the following data 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 supervisory wages and factory supplies cost would NOT be assigned to products using the activity-based costing system?

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!

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?

Spadaro Corporation has an activity-based costing system with three activity cost pools-Processing,Setting Up,and Other.Costs in the Processing 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 and activity-based costing system 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.

McCaskey Corporation uses an activity-based costing system with the following three activity cost pools: The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs. The company has provided the following data concerning its costs: The distribution of resource consumption across activity cost pools is given below: The activity rate for the Fabrication activity cost pool is closest to:

Brisky Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-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. 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 I3 under activity-based costing?

Lehner Corporation has provided the following data 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 indirect factory wages and factory equipment depreciation cost would be assigned to the Customer Orders activity cost pool?

Encarnacion 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: Finally, the costs of Processing and Supervising are combined with the following sales and direct cost data to determine product margins. -What is the product margin for Product C6 under activity-based costing?

Unit-level activities are performed each time a unit is produced.

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.

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 cost per unit of Product B is closest to:

Murri Corporation has an activity-based costing system with three activity cost pools-Processing,Setting Up,and Other.The company's overhead costs,which consist of factory utilities and indirect labor,are allocated to the cost pools in proportion to the activity cost pools' consumption of resources.Costs in the Processing 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 and activity-based costing system appear below: Required: a.Assign overhead costs to activity cost pools using activity-based costing. b.Calculate activity rates for each activity cost pool using activity-based costing. c.Determine the amount of overhead cost that would be assigned to each product using activity-based costing. d.Determine the product margins for each product using activity-based costing.

Hugle Corporation's activity-based costing system has three activity cost pools-Machining,Setting Up,and Other.The company's overhead costs have already been allocated to these cost pools as follows: 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.The following table shows the machine-hours and number of batches associated with each of the company's two products: Additional data concerning the company's products appears 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.

Reach Consulting Corporation has its headquarters in Chicago and operates from three branch offices in Portland,Dallas,and Miami.Two of the company's activity cost pools are General Service and Research Service.These costs are allocated to the three branch offices using an activity-based costing system.Information for next year follows: Estimated branch data for next year is as follows: How much of the headquarters cost allocation should Dallas expect to receive next year?

The controller of Ferrence Company 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 $16,486.40. -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 wall mirrors? (Round off your answer to the nearest whole dollar. )

Cosgrove Company manufactures two products,Product K-7 and Product L-15.Product L-15 is of fairly recent origin,having been developed as an attempt to enter a market closely related to that of Product K-7.Product L-15 is the more complex of the two products,requiring 2.0 hours of direct labor time per unit to manufacture compared to 1.0 hour of direct labor time for Product K-7.Product L-15 is produced on an automated production line. Overhead currently is applied to the products on the basis of direct labor-hours.The company estimated it would incur $510,000 in manufacturing overhead costs and produce 10,000 units of Product L-15 and 40,000 units of Product K- 7 during the current year. Unit costs for materials and labor are: Required: a.Compute the predetermined overhead rate under the current method,and determine the unit product cost of each product for the current year. b.The company is considering the use of activity-based costing as an alternative to its traditional costing method for manufacturing overhead.Data relating to the company's activity cost pools for the current year are given below: Using the data above,determine the unit product cost of each product for the current year. c.What items of overhead cost make Product L-15 so costly to produce according to the activity-based costing system? What influence might the activity-based costing data have on management's opinions regarding the profitability of Product L-15?

Encarnacion 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: Finally, the costs of Processing and Supervising are combined with the following sales and direct cost data to determine product margins. -The activity rate for the Supervising activity cost pool under activity-based costing is closest to:

Pedroni 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 F2 under activity-based costing?