AFM102 Chapter Notes - Chapter 5: Contribution Margin, Fixed Cost, Variable Cost

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greytiger742

13 Nov 2013

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM102

Professor

Tom Vance

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Document Summary

A costing method based on activities that is designed to provide managers with cost information for strategic and other decisions that potentially affect capacity and therefore fixed costs. Overhead refers to all costs including non-manufacturing costs. In activity-based costing, a cost is assigned to a product only if there is good reason to believe that the cost would be affected by decisions concerning the product. Costs that are unaffected by product-related decisions are treated as period expenses instead of product costs. Activity: any event that causes the consumption of overhead resources. Activity cost pool: a bucket in which costs are accumulated that relate to. Activity measure: an allocation base in an activity-based costing system; a single activity measure in the activity-based costing system ideally a measure of the amount of activity that drives the costs in an activity cost occurs activity. Transaction driver: a simple count of the number of times an activity.

Related Questions

Umanzor Corporation uses activity-based costing to assignoverhead costs to products. Overhead costs have already beenallocated to the company's three activity cost pools as follows:Processing, $52,100; Supervising, $30,100; and Other, $18,600.Processing costs are assigned to products using machine-hours (MHs)and Supervising costs are assigned to products using the number ofbatches. The costs in the Other activity cost pool are not assignedto products. Activity data appear below:

	MHs(Processing)	Batches(supervising)
Product S5	17,400	750
Product F5	900	1,030
Total	18,300	1,780

What is the overhead cost assigned to Product S5 underactivity-based costing?

bronzeant649

Lysiak Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment depreciation and supervisory expense-are allocated to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment depreciation $ 47,000 Supervisory expense $ 6,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Machining Order Filling Other Equipment depreciation 0.60 0.10 0.30 Supervisory expense 0.60 0.20 0.20 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. Activity data for the company's two products follow: Activity: MHs (Machining) Orders (Order Filling) Product C9 6,900 200 Product U0 3,100 800 Total 10,000 1,000 What is the overhead cost assigned to Product C9 under activity-based costing?

$21,942
$23,122
$26,500
$1,180

violetgoat484

Deemer 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	$	107,000
Indirect labor	$	12,300

Distribution of Resource Consumption Across Activity CostPools:

	Activity Cost Pools
	Processing	Supervising	Other
Equipment expense	0.30	0.50	0.20
Indirect labor	0.30	0.40	0.30

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 F6	13,600	780
Product X0	1,670	590
Total	15,270	1,370

What is the overhead cost assigned to Product X0 underactivity-based costing?

Multiple Choice

$3,907.80

$29,065.00

$25,157.60

$39,043.00

jadesquirrel919

AFM102 Chapter Notes - Chapter 5: Contribution Margin, Fixed Cost, Variable Cost

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