Exam 13: Activity-Based Costing: a Tool to Aid Decision Making

Hettich 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 Order Processing activity cost pool is closest to:

Which of the following would probably be the most accurate measure of activity to use for allocating the costs associated with a factory's purchasing department?

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:

Assuming that the company charges $485.85 for the Karmo wedding cake, what would be the overall margin on the order?

In activity-based costing, some manufacturing costs can be excluded from product costs.

Activity-based costing involves a two-stage allocation in which overhead costs are first assigned to departments and then to jobs.

The activity rate for the batch setup activity cost pool is closest to:

What is the overhead cost assigned to Product I6 under activity-based costing?

In traditional costing systems, manufacturing costs that are not caused by products are not assigned to products.

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

Mouret Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products. Last year, Product N79A required 28 batches, 6 customer orders, and 712 assembly hours. Required: How much overhead cost would be assigned to Product N79A using the company's activity-based costing system? Show your work!

Activity rates are computed in the second-stage allocation in activity-based costing.

Wasden 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.

The costs of idle capacity should be assigned to products in activity-based costing.

What is the product margin for Product X6 under activity-based costing?

What is the product margin for Product U4 under activity-based costing?

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

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

Tomek Corporation's activity-based costing system has three activity cost pools-Fabricating, Setting Up, and Other. 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 activity rate for Fabricating is $0.82 per MH; the activity rate for Setting Up is $5.40 per batch. The following table shows the machine-hours and number of batches associated with each of the company's two products: Required: Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

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