Question 1

Vassallo Corporation's activity-based costing system has three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources.   Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products.  Additional data concerning the company's products appears below:  Required:
a. Assign overhead costs to activity cost pools using activity-based costing.
b. Calculate activity rates for each activity cost pool using activity-based costing.
c. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.
d. Determine the product margins for each product using activity-based costing.

Accepted Answer

The answer of Vassallo Corporation's activity-based costing system has three...

Question 2

Swagg Jewelry Corporation manufactures custom jewelry. In the past, Swagg has been using a traditional overhead allocation system based solely on direct labor-hours. Sensing that this system was distorting costs and selling prices, Swagg has decided to switch to an activity-based costing system using three activity cost pools. Information on these activity cost pools are as follows:  Job #309 incurred $900 of direct material, 30 hours of direct labor at $40 per hour, 80 machine hours, and 5 inspections.
Required:
a. What is the cost of the job under the activity-based costing system?
b. Relative to the activity-based costing system, would Job #309 have been overcosted or undercosted under the traditional system and by how much?

Accepted Answer

The answer of Swagg Jewelry Corporation manufactures custom jewelry. In...

Question 3

Fife & Jones PLC, a consulting firm, uses an activity-based costing in which there are three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:
Costs:  Distribution of resource consumption:  Required:
a. How much cost, in total, would be allocated to the Working On Engagements activity cost pool?
b. How much cost, in total, would be allocated to the Business Development activity cost pool?
c. How much cost, in total, would be allocated to the Other activity cost pool?

Accepted Answer

The answer of Fife & Jones PLC, a consulting firm,...

Question 4

Flyer Corporation manufactures two products, Product A and Product
A.Product B is produced on an automated production line.Overhead is currently assigned to the products on the basis of direct-labor-hours.The company estimated it would incur $396,000 in manufacturing overhead costs and produce 5,500 units of Product B and 22,000 units of Product A during the current year.Unit costs for materials and direct labor are:
  Required:
a.Compute the predetermined overhead rate under the current method of allocation and determine the unit product cost of each product for the current year.b.The company's overhead costs can be attributed to four major activities.These activities and the amount of overhead cost attributable to each for the current year are given below:
  Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year. 
A.Product B is the more complex of the two products, requiring three hours of direct labor time per unit to manufacture compared to one and one-half hours of direct labor time for Product
B.Product B is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product

Accepted Answer

The answer of Flyer Corporation manufactures two products, Product A...

Question 5

The following data have been provided by Kilmartin Corporation from its activity-based costing accounting system:  Distribution of Resource Consumption across Activity Cost Pools:  The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products.
Required:
a. Determine the total amount of supervisory wages and factory utilities costs that would be allocated to the Machining activity cost pool. Show your work!
b. Determine the total amount of supervisory wages and factory utilities costs that would NOT be assigned to products. Show your work!

Accepted Answer

The answer of The following data have been provided by...

Question 6

Brannum Corporation has provided the following data from its activity-based costing accounting system:  Distribution of Resource Consumption across Activity Cost Pools:  The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products.
Required:
a. Determine the total amount of supervisory wages and factory utilities costs that would be allocated to the Unit Processing activity cost pool. Show your work!
b. Determine the total amount of supervisory wages and factory utilities costs that would NOT be assigned to products. Show your work!

Accepted Answer

The answer of Brannum Corporation has provided the following data...

Question 7

Schulenburg Corporation has provided the following data from its activity-based costing accounting system:  Distribution of Resource Consumption across Activity Cost Pools:  The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products.
Required:
a. Determine the total amount of indirect factory wages and factory equipment depreciation costs that would be allocated to the Product Processing activity cost pool. Show your work!
b. Determine the total amount of indirect factory wages and factory equipment depreciation costs that would NOT be assigned to products. Show your work!

Accepted Answer

The answer of Schulenburg Corporation has provided the following data...

Question 8

Dace Company manufactures two products, Product F and Product G. The company expects to produce and sell 3,200 units of Product F and 2,100 units of Product G during the current year. Data relating to the company's three activity cost pools are given below for the current year:
  Required:
Using the activity-based costing approach, determine the overhead cost per unit for each product.

Accepted Answer

The answer of Dace Company manufactures two products, Product F...

Question 9

Foradori Corporation's activity-based costing system has three activity cost pools-Fabricating, Setting Up, and Other. The company's overhead costs have already been allocated to these cost pools as follows:  Costs in the Fabricating cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. The following table shows the machine-hours and number of batches associated with each of the company's two products:  Required:
Calculate activity rates for each activity cost pool using activity-based costing.

Accepted Answer

The answer of Foradori Corporation's activity-based costing system has three...

Question 10

Suppose that the company decides that the present activity-based costing system is too complex and that all costs (except for the costs of purchased decorations) should be allocated on the basis of the number of guests. In that event, what would you expect to happen to the costs of cakes?

Accepted Answer

If costs are allocated based solely on the number of guests, then the cost of cakes for receptions with fewer guests would go down because there would be fewer guests to split the cost among. Conversely, the cost of cakes for receptions with more guests would go up as the cost is split among more people.

Question 11

Malan Corporation has provided the following data from its activity-based costing accounting system:  Required:
Compute the activity rates for each of the three cost pools. Show your work!

Accepted Answer

The answer of Malan Corporation has provided the following data...

Question 12

Loader Corporation has an activity-based costing system with three activity cost pools-Processing, Setting Up, and Other. The company's overhead costs consist of equipment depreciation and indirect labor and are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Equipment depreciation totals $88,000 and indirect labor totals $1,000. Data concerning the distribution of resource consumption across activity cost pools appear below:  Required:
Assign overhead costs to activity cost pools using activity-based costing.

Accepted Answer

The answer of Loader Corporation has an activity-based costing system...

Question 13

Deraney Corporation has an activity-based costing system with three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs have already been allocated to the cost pools and total $5,800 for the Machining cost pool, $4,700 for the Setting Up cost pool, and $7,500 for the Other cost pool. Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products appear below:  Required:
a. Calculate activity rates for each activity cost pool using activity-based costing.
b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

Accepted Answer

The answer of Deraney Corporation has an activity-based costing system...

Question 14

Data concerning three of Falkenstein Corporation's activity cost pools appear below:  Required:
Compute the activity rates for each of the three cost pools. Show your work!

Accepted Answer

The answer of Data concerning three of Falkenstein Corporation's activity...

Question 15

Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Nie wedding cake to just break even?

Accepted Answer

To calculate the break-even point, we need to add up all of the avoidable costs:

$40.00 (direct materials) + $15.00 (direct labor) + $36.00 (allocated overhead) + $215.98 (opportunity cost) = $306.98

Therefore, the company would need to charge at least $306.98 for the Nie wedding cake to break even. Choice B is the only option that matches this amount.

Question 16

Assuming that the company charges $485.85 for the Karmo wedding cake, what would be the overall margin on the order?

Accepted Answer

The answer of Assuming that the company charges $485.85 for...

Question 17

Assuming that the company charges $584.18 for the Strobl wedding cake, what would be the overall margin on the order?

Accepted Answer

The overall margin is calculated by subtracting the cost from the selling price. If the selling price is $584.18 and the margin is $101.39, it implies that the cost was $482.79 (i.e., $584.18 - $101.39 = $482.79).

Question 18

Lovette Corporation has an activity-based costing system with three activity cost pools-Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Data concerning the company's costs and activity-based costing system appear below:   Required:
Assign overhead costs to activity cost pools using activity-based costing.

Accepted Answer

The answer of Lovette Corporation has an activity-based costing system...

Question 19

Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Ruise wedding cake to just break even?

Accepted Answer

To break even, the company would need to charge an amount that covers their total avoidable costs of $229.40. Therefore, the correct answer is Choice A.

Question 20

Barnette Corporation has an activity-based costing system with three activity cost pools-Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Costs in the Processing cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs and activity-based costing system appear below:  Distribution of Resource Consumption Across Activity Cost Pools    Required:
a. Assign overhead costs to activity cost pools using activity-based costing.
b. Calculate activity rates for each activity cost pool using activity-based costing.
c. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.
d. Determine the product margins for each product using activity-based costing.

Accepted Answer

The answer of Barnette Corporation has an activity-based costing system...

Quiz 13: Activity-Based Costing: a Tool to Aid Decision Making

Suppose that the company decides that the present activity-based costing system is too complex and that all costs (except for the costs of purchased decorations) should be allocated on the basis of the number of guests. In that event, what would you expect to happen to the costs of cakes?

Malan Corporation has provided the following data from its activity-based costing accounting system: Required: Compute the activity rates for each of the three cost pools. Show your work!

Data concerning three of Falkenstein Corporation's activity cost pools appear below: Required: Compute the activity rates for each of the three cost pools. Show your work!

Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Nie wedding cake to just break even?

Assuming that the company charges $485.85 for the Karmo wedding cake, what would be the overall margin on the order?

Assuming that the company charges $584.18 for the Strobl wedding cake, what would be the overall margin on the order?

Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Ruise wedding cake to just break even?