ACTG 2300 Chapter Notes - Chapter 7: General Ledger, Earnings Before Interest And Taxes, Resource Consumption

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brownhornet492

7 Nov 2017

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Chapter 7 activity-based costing: a tool to aid decision making. Activity any event that causes the consumption of overhead resources. Activity cost pool a bucket in which costs are accumulated that related to a single activity measure in an. Activity measure an allocation base in an activity-based costing system. [cost driver reference to an activity measure because the activity measure should drive the cost being allocated. ] Common types of activity measures: transaction drivers simple counts of the number of times an activity occurs. [the number of bills sent of to customers: most often used in practice, duration drivers measure the amount of time required to perform an activity. [the amount of time spent preparing individual bills for customers: more accurate measures of resource consumption, but take more effort to record. Abc defines five levels of activity (that largely do not relate to the volume of units produced)

Related Questions

Greenwood Company manufactures two productsâ15,000 units of Product Y and 7,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z:

Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity
Machining Machine-hours $ 221,100 11,000 MHs
Machine setups Number of setups $ 107,100 210 setups
Production design Number of products $ 85,000 2 products
General factory Direct labor-hours $ 251,000 10,000 DLHs

Activity Measure Product Y Product Z
Machining 7,100 3,900
Number of setups 60 150
Number of products 1 1
Direct labor-hours 8,100 1,900

Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z? (Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)

tancattle67

EXERCISE 7-2 First Stage Allocation [LO7-2] SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is implementing an activity-based costing system that has four activ- ity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-sustaining activity. The following costs will be assigned using the activity-based costing system: Driver and guard wages ... Vehicle operating expense .. Vehicle depreciation ..... Customer representative salaries and expenses Office expenses ... Administrative expenses .. Total cost .... $ 720,000 280,000 120,000 160,000 30,000 320,000 $1,630,000 The distribution of resource consumption across the activity cost pools is as follows: Pickup and Delivery 35% 5% 15% Travel 50% 70% 60% Driver and guard wages Vehicle operating expense ...... Vehicle depreciation .......... Customer Service 10% 0% 0% Other 5% 25% 25% Totals 100% 100% 100% Customer representative salaries and expenses Office expenses ........ Administrative expenses ....... 3 0% 0% 0% 0% 20% na 90% 30% 60% 10% 50% 35% 100% 100% 100% ..... 5% Required: Complete the first stage allocations of costs to activity cost pools as illustrated in Exhibit 7-6.

SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-sustaining activity. The following costs will be assigned using the activity-based costing system:


Driver and guard wages	$	920,000
Vehicle operating expense		350,000
Vehicle depreciation		230,000
Customer representative salaries and expenses		260,000
Office expenses		120,000
Administrative expenses		420,000
Total cost	$	2,300,000

The distribution of resource consumption across the activity cost pools is as follows:

	Travel		Pickup and Delivery		Customer Service		Other		Totals
Driver and guard wages	50	%	35	%	10	%	5	%	100	%
Vehicle operating expense	70	%	5	%	0	%	25	%	100	%
Vehicle depreciation	60	%	15	%	0	%	25	%	100	%
Customer representative salaries and expenses	0	%	0	%	90	%	10	%	100	%
Office expenses	0	%	20	%	30	%	50	%	100	%
Administrative expenses	0	%	5	%	60	%	35	%	100	%

Required:

Complete the first stage allocations of costs to activity cost pools.

		Pickup and	Customer
	Travel	Delivery	Service	Other	Totals
Driver and guard wages					$0
Vehicle operating expense					0
Vehicle depreciation					0
Customer representative salaries and expenses					0
Office expenses					0
Administrative expenses					0
Total cost	$0	$0	$0	$0	$0

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ACTG 2300 Chapter Notes - Chapter 7: General Ledger, Earnings Before Interest And Taxes, Resource Consumption

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