The Skynet Company is noted for an exceptionally impressive line of Mardi Gras masks.Skynet has established the following selling and distribution support activity-cost pools and their corresponding activity drivers for the year 2015:
$$\begin{array} { l r r }
\text { Activity } & \underline { \text { Cost } } & \underline { \text { Cost driver } } \
\text { Marketing } & \$ 150,000 & \$ 1,250,000 \text { of sales } \
\text { Customer service } & 50,000 & 10,000 \text { customer } \
\text { Order execution } & 15,000 & 200 \text { orders } \
\text { Warehousing } & 15,000 & 125 \text { product lines }
\end{array}$$ Required:
a.Determine the activity-cost-driver rate for each of the four selling and distribution activities.
b.Under what circumstances is it appropriate to use each of the activity-cost drivers?
c.Describe at least one possible negative behavioral consequence for each of the four activity-cost drivers.

Question

The Skynet Company is noted for an exceptionally impressive line of Mardi Gras masks.Skynet has established the following selling and distribution support activity-cost pools and their corresponding activity drivers for the year 2015:
 $$\begin{array} { l r r } 
\text { Activity } & \underline { \text { Cost } } & \underline { \text { Cost driver } } \
\text { Marketing } & \$ 150,000 & \$ 1,250,000 \text { of sales } \
\text { Customer service } & 50,000 & 10,000 \text { customer } \
\text { Order execution } & 15,000 & 200 \text { orders } \
\text { Warehousing } & 15,000 & 125 \text { product lines }
\end{array}$$ Required:
a.Determine the activity-cost-driver rate for each of the four selling and distribution activities.
b.Under what circumstances is it appropriate to use each of the activity-cost drivers?
c.Describe at least one possible negative behavioral consequence for each of the four activity-cost drivers.

Quizplus · Accepted Answer

The Answer of The Skynet Company is noted for an exceptionally impressive line of Mardi Gras masks.Skynet has established the following selling and distribution support activity-cost pools and their corresponding activity drivers for the year 2015:
 $$\begin{array} { l r r } 
\text { Activity } & \underline { \text { Cost } } & \underline { \text { Cost driver } } \
\text { Marketing } & \$ 150,000 & \$ 1,250,000 \text { of sales } \
\text { Customer service } & 50,000 & 10,000 \text { customer } \
\text { Order execution } & 15,000 & 200 \text { orders } \
\text { Warehousing } & 15,000 & 125 \text { product lines }
\end{array}$$ Required:
a.Determine the activity-cost-driver rate for each of the four selling and distribution activities.
b.Under what circumstances is it appropriate to use each of the activity-cost drivers?
c.Describe at least one possible negative behavioral consequence for each of the four activity-cost drivers.

The Skynet Company Is Noted for an Exceptionally Impressive Line