Question 1

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.

Accepted Answer

The answer of Ingersol Draperies makes custom draperies for homes...

Question 2

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

Accepted Answer

A) its red margin will be positive. 
B) its red margin may be either positive or negative. 
C) its red margin will be negative. 
D) its red margin will be zero. C

Question 3

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.)

Accepted Answer

A) $635 
B) $815 
C) $710 
D) $760 A

Question 4

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.

Accepted Answer

The answer of Jackson Painting paints the interiors and exteriors...

Question 5

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.

Accepted Answer

The answer of Phoenix Company makes custom covers for air...

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

To the nearest whole dollar, how much wages and salaries cost would be allocated to a customer who made 8 orders in a year?

Accepted Answer

A) $14,784 
B) $11,704 
C) $7,392 
D) $9,548

Question 8

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

Accepted Answer

A) its yellow margin will be positive. 
B) its yellow margin may be either positive or negative. 
C) its yellow margin will be negative. 
D) its yellow margin will be zero.

Question 9

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.)

Accepted Answer

A) $13,650 
B) $12,600 
C) $14,400 
D) $10,800

Question 10

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

Accepted Answer

A) its green margin will be positive. 
B) its green margin may be positive, negative, or zero. 
C) its green margin will be negative. 
D) its green margin will be zero.

Question 11

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

Accepted Answer

A) its green margin will be positive. 
B) its green margin may be positive, negative, or zero. 
C) its green margin will be negative. 
D) its green margin will be zero.

Question 12

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.)

Accepted Answer

A) $1,560 
B) $1,760 
C) $1,060 
D) $910

Question 13

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.)

Accepted Answer

A) $56.00 
B) $48.00 
C) $49.67 
D) $52.00

Question 14

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.)

Accepted Answer

A) $690 
B) $440 
C) $390 
D) $540

Question 15

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.

Accepted Answer

The answer of Hasty Hardwood Floors installs oak and other...

Question 16

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:

Accepted Answer

The answer of Goel Company, a wholesale distributor, uses activity-based...

Exam 14: Abc Action Analysis