Exam 7: Abc Action Analysis

Grogam Catering uses activity-based costing for its overhead costs.The company has provided the following data concerning the activity rates in its activity-based costing system: The number of meals served is the measure of activity for the Preparing Meals activity cost pool.The number of functions catered is used as the activity measure for the Arranging Functions activity cost pool. Management would like to know whether the company made any money on a recent function at which 100 meals were served.The company catered the function for a fixed price of $21 per meal.The cost of the raw ingredients for the meals was $8.25 per meal.This cost is in addition to the costs of wages,supplies,and other expenses detailed above. For the purposes of preparing action analyses,management has assigned ease of adjustment codes to the costs as follows: wages are classified as a Yellow cost;supplies and raw ingredients as a Green cost;and other expenses as a Red cost. Wages......... Supplies..... Other expenses... Preparing Meals Arranging Functions \ 1.15 \ 110 \ 0.35 \ 380 \ 0.25 \ 70 -Suppose an action analysis report is prepared for the function mentioned above.What would be the "red margin" in the action analysis report? (Round to the nearest whole dollar. )

Escau Corporation is a wholesale distributor that uses activity-based costing for all of its overhead costs.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 activity measures for the activity cost pools for the year are as follows: Overhead costs: Wages and salaries ...... \ 380,000 Other expenses ........... 100,000 Total ..................... \ 480,000 Distribution of resource consumption: Activity Cost Pools Filling Customer Orders Support Other Total Wages and salaries ...... 30\% 60\% 10\% 100\% Other expenses .......... 35\% 45\% 20\% 100\% Activity Cost Pool Activity Filling orders............. 3,000 orders Customer support..... 20 customers -To the nearest whole dollar,how much wages and salaries cost would be allocated to a customer who made 8 orders in a year?

If a cost object such as a product or customer has a negative red margin,then:

Phoenix Company makes custom covers for air conditioning units for homes and businesses.The company uses an activity-based costing system for its overhead costs.The company has provided the following data concerning its annual overhead costs and its activity cost pools: 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: Required: a.Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below: b.Compute the activity rates (i.e. ,cost per unit of activity)for the Making Awnings and Job Support activity cost pools by filling in the table below: c.Prepare an action analysis report in good form of a job that involves making 50 yards of covers and has direct materials and direct labor cost of $1,500.The sales revenue from this job is $2,500. For purposes of this action analysis report,direct materials and direct labor should be classified as a Green cost;production overhead as a Red cost;and office expense as a Yellow cost. Overhead costs: Production overhead.... \1 00.000 Office expense............... Total............................. $\text { Distribution of resource consumption: }$ Making Job Activity Cost Pools Covers Support Other Total Production overhead .......... 40\% 42\% 18\% 100\% Office expense..................... 12\% 60\% 28\% 100\% Activity Cost Pool Annual Activity Making covers 2,500 yards Job support 200 jobs Other Not applicable Making Covers Job Support Other Total Production overhead.......... Office expense ................. Total ....................... Makinn Covers Job Support Activity ........................ Production overhead........ Office expense ................. Total .....................

Jackson Painting paints the interiors and exteriors of homes and commercial buildings.The company uses an activity-based costing system for its overhead costs.The company has provided the following data concerning its activity-based costing system. The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The company has already finished the first stage of the allocation process in which costs were allocated to the activity cost centers.The results are listed below: Required: a.Compute the activity rates (i.e. ,cost per unit of activity)for the Painting and Job Support activity cost pools.Round off all calculations to the nearest whole cent. b.Prepare an action analysis report in good form of a job that involves painting 63 square meters and has direct materials and direct labor cost of $2,070.The sales revenue from this job is $2,500. For purposes of this action analysis report,direct materials and direct labor should be classified as a Green cost;production overhead as a Red cost;and office expense as a Yellow cost. Activity Cost Pool Activity Measure Annual Activity Production overhead...... Square meters 10,000 square meters Job support............. Jobs 320 jobs Other None Not apolicable Painting Job Support Other Total Production overhead.... \ 54,000 \ 42,000 \ 24,000 \ 120,000 Office expense .......... Total ....................

An action analysis report reconciles activity-based costing product costs with traditional product costs based on direct labor.

If a cost object such as a product or customer has a negative green margin,then:

Grogam Catering uses activity-based costing for its overhead costs.The company has provided the following data concerning the activity rates in its activity-based costing system: The number of meals served is the measure of activity for the Preparing Meals activity cost pool.The number of functions catered is used as the activity measure for the Arranging Functions activity cost pool. Management would like to know whether the company made any money on a recent function at which 100 meals were served.The company catered the function for a fixed price of $21 per meal.The cost of the raw ingredients for the meals was $8.25 per meal.This cost is in addition to the costs of wages,supplies,and other expenses detailed above. For the purposes of preparing action analyses,management has assigned ease of adjustment codes to the costs as follows: wages are classified as a Yellow cost;supplies and raw ingredients as a Green cost;and other expenses as a Red cost. Wages......... Supplies..... Other expenses... Preparing Meals Arranging Functions \ 1.15 \ 110 \ 0.35 \ 380 \ 0.25 \ 70 -According to the activity-based costing system,what was the total cost (including the costs of raw ingredients)of the function mentioned above? (Round to the nearest whole dollar. )

Escau Corporation is a wholesale distributor that uses activity-based costing for all of its overhead costs.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 activity measures for the activity cost pools for the year are as follows: Overhead costs: Wages and salaries ...... \ 380,000 Other expenses ........... 100,000 Total ..................... \ 480,000 Distribution of resource consumption: Activity Cost Pools Filling Customer Orders Support Other Total Wages and salaries ...... 30\% 60\% 10\% 100\% Other expenses .......... 35\% 45\% 20\% 100\% Activity Cost Pool Activity Filling orders............. 3,000 orders Customer support..... 20 customers -What would be the total overhead cost per order according to the activity based costing system? In other words,what would be the overall activity rate for the filling orders activity cost pool? (Round to the nearest whole cent. )

Hasty Hardwood Floors installs oak and other hardwood floors in homes and businesses.The company uses an activity-based costing system for its overhead costs.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: A "square" is a measure of area that is roughly equivalent to 1,000 square feet. Required: a.Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below: b.Compute the activity rates (i.e. ,cost per unit of activity)for the Installing Floors and Job Support activity cost pools by filling in the table below: c.Compute the overhead cost,according to the activity-based costing system,of a job that involves installing 3.4 squares.

Goel Company,a wholesale distributor,uses activity-based costing for its overhead costs.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: Required: Compute the activity rates (i.e. ,cost per unit of activity)for the Filling Orders and Product Support activity cost pools:

Grogam Catering uses activity-based costing for its overhead costs.The company has provided the following data concerning the activity rates in its activity-based costing system: The number of meals served is the measure of activity for the Preparing Meals activity cost pool.The number of functions catered is used as the activity measure for the Arranging Functions activity cost pool. Management would like to know whether the company made any money on a recent function at which 100 meals were served.The company catered the function for a fixed price of $21 per meal.The cost of the raw ingredients for the meals was $8.25 per meal.This cost is in addition to the costs of wages,supplies,and other expenses detailed above. For the purposes of preparing action analyses,management has assigned ease of adjustment codes to the costs as follows: wages are classified as a Yellow cost;supplies and raw ingredients as a Green cost;and other expenses as a Red cost. Wages......... Supplies..... Other expenses... Preparing Meals Arranging Functions \ 1.15 \ 110 \ 0.35 \ 380 \ 0.25 \ 70 -Suppose an action analysis report is prepared for the function mentioned above.What would be the "yellow margin" in the action analysis report? (Round to the nearest whole dollar. )

Escau Corporation is a wholesale distributor that uses activity-based costing for all of its overhead costs.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 activity measures for the activity cost pools for the year are as follows: Overhead costs: Wages and salaries ...... \ 380,000 Other expenses ........... 100,000 Total ..................... \ 480,000 Distribution of resource consumption: Activity Cost Pools Filling Customer Orders Support Other Total Wages and salaries ...... 30\% 60\% 10\% 100\% Other expenses .......... 35\% 45\% 20\% 100\% Activity Cost Pool Activity Filling orders............. 3,000 orders Customer support..... 20 customers -What would be the total overhead cost per customer according to the activity based costing system? In other words,what would be the overall activity rate for the customer support activity cost pool? (Round to the nearest whole dollar. )

If a cost object such as a product or customer has a negative yellow margin,then:

If a cost object such as a product or customer has a positive red margin,then:

Ingersol Draperies makes custom draperies for homes and businesses.The company uses an activity-based costing system for its overhead costs.The company has provided the following data concerning its annual overhead costs and its activity cost pools. 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: Required: a.Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below: b.Compute the activity rates (i.e. ,cost per unit of activity)for the Making Drapes and Job Support activity cost pools by filling in the table below: c.Prepare an action analysis report in good form of a job that involves making 71 yards of drapes and has direct materials and direct labor cost of $2,510.The sales revenue from this job is $4,400. For purposes of this action analysis report,direct materials and direct labor should be classified as a Green cost;production overhead as a Red cost;and office expense as a Yellow cost.