1.Which of the following activities would be classified as a batch­levelactivity? Circle One:Millin

1.Which of the following activities would be classified as a batch­levelactivity? Circle One:Milling a part required for the final product.Setting up equipment.Designing a new product.Training employees.2. Which of the following is not a limitation of activity­based costing? CircleOne.Maintaining an activity­based costing system is more costly thanmaintaining a traditional direct labor­based costing system.In practice, most managers insist on fully allocating all costs toproducts, customers, and other costing objects in an activity­basedcosting system. This results in overstated costs.More accurate product costs may result in increasing the selling pricesof some products.Changing from a traditional direct labor­based costing system to anactivity­based costing system changes product margins and other keyperformance indicators used by managers. Such changes are oftenresisted by managers.3.Designing a new product is an example of a:Unit­level activity.Organization­sustainingactivity.Batch­level activity.Product­level activity.4.Bulmash Corporation uses an activity­based costing system with thefollowing three activity cost pools:Activity Cost PoolTotal ActivityFabrication40,000 machine­hoursOrder processing500 ordersOtherNot applicableThe Other activity cost pool is used to accumulate costs of idle capacity andorganization­sustaining costs.The company has provided the following data concerning its costs:Wages and salaries$420,000Depreciation$100,000Occupancy$120,000Total$640,000The distribution of resource consumption across activity cost pools is given below:Activity Cost PoolsFabricatioTotaOrder Processing Othernl100Wages and salaries 5%80%15%%100Depreciation15%45%40%%100Occupancy25%50%25%%The activity rate for the Fabrication activity cost pool is closest to:$2.40 per machine­hour$1.65 per machine­hour5.$0.80 per machine­hour$4.00 per machine­hourJordan Corporation uses an activity­based costing system with thefollowing three activity cost pools:Activity Cost PoolFabricationTotal Activity70,000 machine­hoursOrder processing500 ordersOtherNot applicableThe Other activity cost pool is used to accumulate costs of idle capacity andorganization­sustaining costs.The company has provided the following data concerning its costs:Wages and salaries$420,000Depreciation$160,000Occupancy$200,000Total$780,000The distribution of resource consumption across activity cost pools is given below:Activity Cost PoolsOrderFabricationOtherTotalProcessingWages and60%20%20%100%salariesDepreciation5%60%35%100%Occupancy25%50%25%100%The activity rate for the Order Processing activity cost pool is closest to:$780 per order$676 per order6.$312 per order$560 per orderWenston Corporation has provided the following data concerning itsoverhead costs for the coming year:Wages and salaries$440,000Depreciation$120,000Occupancy$160,000Total$720,000The company has an activity­based costing system with the following threeactivity cost pools and estimated activity for the coming year:Activity Cost PoolTotal ActivityAssembly40,000 labor­hoursOrder processing600 ordersOtherNot applicableThe distribution of resource consumption across activity cost pools is given below:Activity Cost PoolsFabricationOrder ProcessingOtherWages and salaries40%35%25%Depreciation20%30%50%Occupancy10%65%25%The activity rate for the Order Processing activity cost pool is closest to:$520 per order$490 per order$420 per order$780 per order7.Bullets Corporation uses an activity­based costing system with threeactivity cost pools. The company has provided the following dataconcerning its costs:Wages and salaries$480,000Depreciation$100,000Occupancy$180,000Total$760,000The distribution of resource consumption across the three activity cost pools isgiven below:Activity Cost PoolsFabricationOrder ProcessingOtherTotalWages and salaries25%55%20%100%Depreciation20%30%50%100%Occupancy35%35%30%100%Total100%100%100%How much cost, in total, would be allocated in the first­stage allocation to theOrder Processing activity cost pool?$418,000$304,000$357,000$266,0008.Strasburg Corporation has provided the following data from its activity­based costing system:Activity Cost PoolTotal CostTotal ActivityAssembly$1,114,92057,000 machine­hoursProcessing orders$47,0161,800 ordersInspection$107,3281,560 inspection­hoursThe company makes 430 units of product S78N a year, requiring a total of 1,120machine­hours, 40 orders, and 30 inspection­hours per year. The product’s directmaterials cost is $49.81 per unit and its direct labor cost is $12.34 per unit. Theproduct sells for $129.90 per unit.According to the activity­based costing system, the product margin for productS78N is:$6,180.50$29,132.50$5,161.30$4,116.509. Wenstein Corporation has its headquarters in Chicago and operates from threebranch offices in Portland, Dallas, and Miami. Two of the company’s activity costpools are General Service and Research Service. These costs are allocated to thethree branch offices using an activity­based costing system. Information for nextyear follows::Activity Cost PoolActivity MeasureEstimated CostGeneral service% of time devoted to branch$700,000Research serviceComputer time$140,000Estimated branch data for next year is as follows:% of timeComputer timePortland30%200,000 minutesDallas60%150,000 minutesMiami10%50,000 minutesHow much of the headquarters cost allocation should Dallas expect to receive nextyear?$409,500$280,000$472,500$504,00010.Square Corporation has provided the following data from its activity­basedcosting accounting system:Activity Cost PoolTotal CostTotal ActivityDesigning products$582,0164,547 design hoursSetting up batches$29,760960 batch set­upsAssembling products$19,4401,620 assembly hoursThe activity rate for the “designing products” activity cost pool is closest to:$89 per product design hour$78 per product design hour$128 per product design hour$582,016 per product design hour11.Activity rates from Pleziastic Corporation’s activity­based costing systemare listed below. The company uses the activity rates to assign overheadcosts to products:Activity Cost PoolActivity RateProcessing customer orders$92.86 per customer orderAssembling products$1.78 per assembly hourSetting up batches$52.09 per batchLast year, Product F76D involved 2 customer orders, 434 assembly hours, and 20batches. Howmuch overhead cost would be assigned to Product F76D using theactivity­based costing system?$146.73$2,000.04$1,041.80$66,908.88Nets Corporation has provided the following data from its activity­based costingaccounting system:Indirect factory wages$520,000Factory equipment depreciation$260,000Distribution of Resource Consumption across Activity Cost Pools:CustomerProductOtherOrdersProcessingIndirect factory wages40%50%10%Factory equipment depreciation 15%65%20%The “Other” activity cost pool consists of the costs of idle capacity andorganization­sustaining costs that are not assigned to products.12.How much indirect factory wages and factory equipment depreciation costwould be assigned to the Customer Orders activity cost pool?13.$780,000$390,000$247,000$214,500How much indirect factory wages and factory equipment depreciation costwould NOT be assigned to products using the activity­based costingsystem?$260,000$520,000$0$104,000The following data have been provided by Quintessential Corporation from itsactivity­based costing accounting system:Factory supervision$360,000Total100%100%Indirect factory labor$280,000Distribution of Resource Consumption across Activity Cost Pools:Batch Set­UpExpeditingFactory supervision5%85%Indirect factory labor30%50%The “Other” activity cost pool consists of the costs of idle capacity andorganization­sustaining costs that are not assigned to products.14.How much factory supervision and indirect factory labor cost would beassigned to the Batch Set­Up activity cost pool?15.Other10%20%$640,000$112,000$102,000$320,000How much factory supervision and indirect factory labor cost would NOTbe assigned to products using the activity­based costing system?$280,000$360,000$0$92,000Total100%100%

 

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