MGAB03H3 Study Guide - Final Guide: Activity-Based Costing, Cash Flow, Cost Driver
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#6
Younan Corporation manufactures two products: Product E47F andProduct D02M. The company is considering implementing anactivity-based costing (ABC) system that allocates itsmanufacturing overhead to four cost pools. The following additionalinformation is available for the company as a whole and forProducts E47F and D02M.
Activity CostPool | ActivityMeasure | Total Cost | Total Activity | ||
Machining | Machine-hours | $ | 165,000 | 11,000 | MHs |
Machine setups | Number of setups | $ | 150,000 | 250 | setups |
Product design | Number of products | $ | 70,000 | 2 | products |
Order size | Direct labor-hours | $ | 310,000 | 10,000 | DLHs |
ActivityMeasure | ProductE47F | ProductD02M |
Machine-hours | 5,000 | 6,000 |
Number of setups | 200 | 50 |
Number of products | 1 | 1 |
Direct labor-hours | 4,000 | 6,000 |
Using the ABC system, the percentage of the total overhead costthat is assigned to Product D02M is closest to:
rev: 03_17_2018_QC_CS-119201
22.30%
49.06%
26.76%
50.00%
#7
Tomasini Corporation has provided the following data from itsactivity-based costing accounting system:
Supervisory wages | $ | 660,000 |
Factory supplies | $ | 280,000 |
Distribution of Resource Consumption across Activity CostPools:
Activity Cost Pools | BatchProcessing | Unit Processing | Other | Total | |
Supervisory wages | 20% | 70% | 10% | 100% | |
Factory supplies | 45% | 35% | 20% | 100% | |
The "Other" activity cost pool consists of the costs of idlecapacity and organization-sustaining costs that are not assigned toproducts.
How much supervisory wages and factory supplies cost would NOTbe assigned to products using the activity-based costingsystem?
Garrison 16e Rechecks 2018-07-24
$280,000
$660,000
$122,000
$0
#9
Addleman Corporation has an activity-based costing system withthree activity cost pools--Processing, Supervising, and Other. Inthe first stage allocations, costs in the two overhead accounts,equipment expense and indirect labor, are allocated to the threeactivity cost pools based on resource consumption. Data used in thefirst stage allocations follow:
Overhead costs: | |||||||
Equipment expense | $ | 73,000 | |||||
Indirect labor | $ | 1,000 | |||||
Distribution of Resource Consumption Across Activity CostPools:
Activity Cost Pools | |||||
Processing | Supervising | Other | |||
Equipment expense | 0.20 | 0.10 | 0.70 | ||
Indirect labor | 0.20 | 0.20 | 0.60 | ||
Processing costs are assigned to products using machine-hours(MHs) and Supervising costs are assigned to products using thenumber of batches. The costs in the Other activity cost pool arenot assigned to products. Activity data for the company's twoproducts follow:
Activity:
MHs(Processing) | Batches(Supervising) | |
Product W3 | 7,600 | 100 |
Product H3 | 2,400 | 900 |
Total | 10,000 | 1,000 |
Finally, the costs of Processing and Supervising are combinedwith the following sales and direct cost data to determine productmargins.
Sales and Direct Cost Data:
Product W3 | Product H3 | |||||||||
Sales (total) | $ | 159,500 | $ | 154,100 | ||||||
Direct materials (total) | $ | 66,300 | $ | 55,300 | ||||||
Direct labor (total) | $ | 77,800 | $ | 84,100 | ||||||
The activity rate for the Supervising activity cost pool underactivity-based costing is closest to:
Garrison 16e Rechecks 2018-07-24
$7.50 per batch
$74.00 per batch
$1.11 per batch
$1.00 per batch
7.
Murri Corporation has an activity-based costing system withthree activity cost pools-Processing, Setting Up, and Other. Thecompany's overhead costs, which consist of factory utilities andindirect labor, are allocated to the cost pools in proportion tothe activity cost pools' consumption of resources. Costs in theProcessing cost pool are assigned to products based onmachine-hours (MHs) and costs in the Setting Up cost pool areassigned to products based on the number of batches. Costs in theOther cost pool are not assigned to products. Data concerning thetwo products and the company's costs and activity-based costingsystem appear below: |
Factory utilities (total) | $ | 34,200 |
Indirect labor (total) | $ | 12,800 |
Distribution of Resources Consumption Across ActivityCost Pools | |||
Processing | Settingup | Other | |
Factoryutilities | 0.40 | 0.30 | 0.30 |
Indirect labor | 0.20 | 0.10 | 0.70 |
MHs | Batches | |
Product X7 | 3,700 | 1,300 |
Product L4 | 7,700 | 700 |
Total | 11,400 | 2,000 |
Product X7 | Product L4 | |||
Sales (total) | $ | 78,100 | $ | 101,700 |
Direct materials(total) | $ | 22,800 | $ | 38,700 |
Direct labor(total) | $ | 35,200 | $ | 41,300 |
Required: | |
a. | Assign overhead costs to activity cost pools usingactivity-based costing. (Omit the "$" sign in yourresponse.) |
Activity Cost Pools | ||||||||
Processing | Settingup | Other | Total | |||||
Factoryutilities | $ | $ | $ | $ | ||||
Indirect labor | ||||||||
Total | $ | $ | $ | $ | ||||
b. | Calculate activity rates for each activity cost pool usingactivity-based costing. (Round youranswers to 2 decimal places. Omitthe "$" sign in your response.) |
ActivityRate | ||
Processing | $ | per MH |
Setting up | $ | per batch |
c. | Determine the amount of overhead cost that would be assigned toeach product using activity-based costing. (Omit the "$"sign in your response.) |
Product X7 | Product L4 | |
Processing | $ | $ |
Setting up | ||
Total | $ | $ |
d. | Determine the product margins for each product usingactivity-based costing. (Omit the "$" sign in yourresponse.) |
Product Margin | |
Product X7 | $ |
Product L4 | $ |