Activity – cost drivers16,000 hoursreme Manufacturing Company provides the following ABC costing information:Total CostsctivitiesAccount inquiry$320,000$90,0006,000,000 lines80,000 accounts$174,000Account billingAccount verification accounts5,000 letters$36,250Correspondence letters$620,250Total costsThe above activities are used by Departments A and B as follows:Department BDepartment A2.200 hours3,700 hoursAccount inquiry hoursAccount billing Vines900.000 lines750,000 lines3,000 accounts5,000 accountsAccount verification accounts2,100 letters1,700 lettersCorrespondence lettersHow much of the account billing cost will be assigned to Department B?OA. $90,000O B. $11,250OC. S45,000O D. $13,500O Time Remaining: 02:27:15Proesc@23244.&*23.7.89.QERtab

Activity Based Costing is a method identifying activities and then assigning indirect cost and…

Company provdes the following ABC costing information: Total Costs Activity-cost drivers itles 16,000 hours $320,000 $90,000 ount inquiry count billing count verification accounts orrespondence letters Total costs 6,000,000 lines $174,000 80,000 accounts $36,250 5,000 letters $620,250 The above activities are used by Departments A and B as follows: Department A Department B 3,700 hours 2,200 hours 900,000 lines Account inquiry hours Account billing Vines 750,000 lines Account verification accounts 5,000 accounts 3,000 accounts Correspondence letters 1,700 letters 2,100 letters How much of the account billing cost will be assigned to Department B? OA S90,000 OB. $11,250 OC. S45,000 OD. $13,500 O Time Remaining: 02:27:15 esc ) 23 & 3. 5. 6. 8. 9. fab W

Company provdes the following ABC costing information: Total Costs Activity-cost drivers itles 16,000 hours $320,000 $90,000 ount inquiry count billing count verification accounts orrespondence letters Total costs 6,000,000 lines $174,000 80,000 accounts $36,250 5,000 letters $620,250 The above activities are used by Departments A and B as follows: Department A Department B 3,700 hours 2,200 hours 900,000 lines Account inquiry hours Account billing Vines 750,000 lines Account verification accounts 5,000 accounts 3,000 accounts Correspondence letters 1,700 letters 2,100 letters How much of the account billing cost will be assigned to Department B? OA S90,000 OB. $11,250 OC. S45,000 OD. $13,500 O Time Remaining: 02:27:15 esc ) 23 & 3. 5. 6. 8. 9. fab W

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sequential (Step) Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support Departments Producing Departments HumanResources GeneralFactory Fabricating Assembly Direct costs $165,000 $380,000 $114,200 $90,000 Normal activity: Number of employees — 40 70 150 Square footage 1,800 — 5,500 13,200 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded…
Renata Company has four departments: Materials, Personnel, Manufacturing, and Packaging. Information follows. Department Square Feet Asset Values Employees Materials 26 30,000 $ 9,300 Personnel 13 12,000 2,480 Manufacturing Packaging 52 66,000 37,820 39 12,000 12,400 Total 130 120,000 $ 62,000 The four departments share the following indirect expenses for supervision, utilities, and insurance according to their allocation bases. Indirect Expense Supervision Utilities Insurance Total Cost $ 82,700 Number of employees Allocation Base 52,000 Square feet occupied 23,500 Asset values $ 158,200 Allocate each of the three indirect expenses to the four departments.
Assume a service company has implemented an activity-based costing system with five activities as shown below: Activity Cost Pool (Activity Measure) Total Cost Total Activity $ 400,000 $ 280,000 $ 150,000 $ 450,000 $ 300,000 Customer deliveries (Number of deliveries) Manual order processing (Number of manual orders) 8,000 deliveries 5,000 manual orders Electronic order processing (Number of electronic orders) 15,000 electronic orders Line item picking (Number of line items picked) Other organization-sustaining costs (None) 375,000 line items The company serves numerous customers, two of which include Hospital A and Hospital B. The activity demands pertaining to these two customers are as follows: Activity Activity Measure Hospital A Hospital B Number of deliveries 12 25 Number of manual orders 30 Number of electronic orders 15 Number of line items picked 130 250 How much total activity cost should be assigned to Hospital A for internal management purposes?
Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Department Fabricating Finishing Repair Quality Control From: Direct Costs Repair $ 147,600 Service department costs Repair Quality control Total 112, 200 48,300 140, 210 $ Repair 8 0.3 0 $ Proportion of Services Used by Quality Control Fabricating Required: Use the reciprocal method to allocate the service costs. (Matrix algebra is not required.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round Intermediate calculations. Round your final answers to the nearest whole dollar amounts. 0.3 Cost Allocation To: Quality Control 0.5 8.2 Fabricating $ Finishing 0.2 0.5 0 $ Finishing
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs From: Service department costs IT HR Total IT $ 0 16 $ 152,000 Required: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. HR 1,525 0 $ 247,950 152,000 Answer is not complete. Cost Allocation To: IT HR 152,000 $ 247,950 Publishing 2,440 24 $ 431,000 $ 247,950 Publishing $ Binding 2,135 40 $ 392,500 0 Binding 0
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ABC Corporation has three service department with the following costs and activity base: Service Department Cost Activity Base for Allocation Graphics Production $200,000 Number of Copies Accounting 500,000 Number of invoices processed Personnel Department 400,000 Number of employees ABC has three operating divisions (organized as profit centers), mirco, macro, and super. Their revenue, cost and activity information are-as follows: Mirco Macro Super Direct Revenues $700,000 $850,000 $650,000 Direct operating expenses 50,000 70,000 100,000 Number of copies 20,000 30,000 50,000 Number of invoices 700 800 500 processed Number of employees 130 145 125 How much of the $500,000 total cost from the accounting department would be allocated to the super division?
Physical Plant, and two operating departments, Sales and After-Sales. Data concerning those departments follow: Operating Department Service Department Physical General Sales Management $ 33,384 $ 68,070 Plant After-Sales $ 232,830 Departmental costs Employee time Space occupied $ 292,500 33,000 6,000 5,000 40,000 10,000 5,000 40,000 28,000 General Management Department costs are allocated first on the basis of employee time and Physical Plant Department costs are allocated second on the basis of space occupied. The total After-Sales Department cost after allocations is closest to: Multiple Choice $321,410 $332,888 $335,534 $335,670
Assume a company's activity-based costing system includes three activities with the following activity rates: Activity Cost Pool Activity Rate Travel $ 2 per mile driven Deliveries $ 50 per delivery Customer service $ 22 per phone call Two of the company's many customers include Customer A and Customer B. These two customers consumed the company's activities as follows: Total Expected Activity Customer A Customer B Travel (number of miles driven) 300 250 Deliveries (number of deliveries) 15 5 Customer service (number of phone calls) 20 12 If the company earned $1,130 in revenue serving Customer B, then what is the customer margin for this customer? Multiple Choice $96 $156 $116 $136
Merlin Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry hours $200,000 10,000 hours Account billing lines $140,000 4,000,000 lines Account verification accounts $75,000 40,000 accounts Correspondence letters $25,000 4,000 letters Total costs $440,000 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,000 hours 4,000 hours Account billing lines 400,000 lines 200,000 lines Account verification accounts 10,000 accounts 8,000 accounts Correspondence letters 1,000 letters 1,600 letters Required: a. How much of the correspondence costs will be assigned to Department B? b. How much of the total costs will be assigned to Department A?
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Sequential (Step) Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Number of employees Square footage Human Resources General Factory Direct costs Allocate: General Factory Support Departments Human Resources Human Resources Total after allocation $150,000 1,500 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Calculate the allocation ratios (rounded to six significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Human…