Dog Cumberland Enterprises makes a variety of products that it sells to other businesses. The company's activity-based costing systemhas four activity cost pools for assigning costs to products and customers. Details concerning that ABC system are listed below:Activity Cost PoolSupporting assemblyProcessing batchesProcessing orders.Serving customersActivity MeasureDirect labor-hours(DLHS)Number of batchesNumber of orders.Number of customersActivity Rate5.65 per DLH$$ 146.65 per batch$ 80.05 per orderper$2,663.00customerThe cost of serving customers, $2,663.00 per customer, is the cost of serving a customer for one year.Steckman Corporation buys only one of the company's products which Cumberland Enterprises sells for $22.05 per unit. Last yearSteckman Corporation ordered a total of 1,200 units of this product in 4 orders. To fill the orders, 8batches were required. Thedirect materials cost is $7.65 per unit and the direct labor cost is $5.20 per unit. Each unit requires 0.30 DLHs.According to the ABC system, the customer margin for this customer this past year was closest to:

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Description: Dog Cumberland Enterprises makes a variety of products that it sells to other businesses. The company's activity-based costing systemhas four activity cost pools for assigning costs to products and customers. Details concerning that ABC system are li

ABC costing, or activity-based costing, is a cost accounting method that allocates indirect costs to…

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Cumberland Enterprises makes a variety of products that it sells to other businesses. The company's activity-based costing system has four activity cost pools for assigning costs to products and customers. Details concerning that ABC system are listed below: Activity Cost Pool Supporting assembly Processing batches. Processing orders Serving customers Activity Measure Direct labor-hours (DLHS) Number of batches Number of orders. Number of customers $ $ $ Activity Rate 5.65 per DLH 146.65 per batch. 80.05 per order per customer $2,663.00 The cost of serving customers, $2,663.00 per customer, is the cost of serving a customer for one year. Steckman Corporation buys only one of the company's products which Cumberland Enterprises sells for $22.05 per unit. Last year Steckman Corporation ordered a total of 1,200 units of this product in 4 orders. To fill the orders, 8batches were required. The direct materials cost is $7.65 per unit and the direct labor cost is $5.20 per unit. Each unit requires 0.30 DLHs. According to the ABC system, the customer margin for this customer this past year was closest to:

Cumberland Enterprises makes a variety of products that it sells to other businesses. The company's activity-based costing system has four activity cost pools for assigning costs to products and customers. Details concerning that ABC system are listed below: Activity Cost Pool Supporting assembly Processing batches. Processing orders Serving customers Activity Measure Direct labor-hours (DLHS) Number of batches Number of orders. Number of customers $ $ $ Activity Rate 5.65 per DLH 146.65 per batch. 80.05 per order per customer $2,663.00 The cost of serving customers, $2,663.00 per customer, is the cost of serving a customer for one year. Steckman Corporation buys only one of the company's products which Cumberland Enterprises sells for $22.05 per unit. Last year Steckman Corporation ordered a total of 1,200 units of this product in 4 orders. To fill the orders, 8batches were required. The direct materials cost is $7.65 per unit and the direct labor cost is $5.20 per unit. Each unit requires 0.30 DLHs. According to the ABC system, the customer margin for this customer this past year was closest to:

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 8EA: Rex Industries has identified three different activities as cost drivers: machine setups, machine...

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Electan Company produces two types of printers. The company uses ABC, and all activity drivers are duration drivers. Electan Company is considering using DBC and has gathered the following data to help with its decision. A. Activities with duration drivers: B. Activities with consumption ratios and costs: C. Products with cycle time and practical capacity: Required: 1. Using cycle time and practical capacity for each product, calculate the total time for all primary activities. Comment on the relationship to ABC. 2. Calculate the overhead rate that DBC uses to assign costs. Comment on the relationship to a unit-based plantwide overhead rate. 3. Use the overhead rate calculated in Requirement 2 to calculate (a) the overhead cost per unit for each product, and (b) the total overhead assigned to each product. How does this compare to the ABC assignments shown in Part B of the Information set? 4. What if the units actually produced were 10,000 for Printer A and 18,000 for Printer B. Using DBC, calculate the cost of unused capacity.
Comfort Foods Inc. uses activity-based costing to determine product costs. For each activity listed in the left column, match an appropriate activity base from the right column. You may use items in the activity-base list more than once or not at all.
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A manufacturing company has two service and two production departments. Human Resources and Machine Repair are the service departments. The production departments are Grinding and Polishing. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The human resources department services all departments of the company, and its costs are allocated using the numbers of employees within each department, while machine repair costs are allocable to Grinding and Polishing on the basis of machine hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
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