Mountain View Company uses activity-based costing to charge warehouse services to its clients. Based on a recent study, they charge $25 per order processed, 0.5% of the order value for insurance, $3.75 per item stored, and $40 per shipment. Last quarter, the following information was collected for three clients: Client X Client Y Client Z Cost driver Number of orders processed 15 22 18 Number of shipments 18 30 42 Number of items stored 3,600 5,200 8,800 Order value $240,000 $185,000 $320,000 What are the total warehouse service costs charged to Client Z for the quarter?

Mountain View Company uses activity-based costing to charge warehouse services to its clients. Based on a recent study, they charge $25 per order processed, 0.5% of the order value for insurance, $3.75 per item stored, and $40 per shipment. Last quarter, the following information was collected for three clients: Client X Client Y Client Z Cost driver Number of orders processed 15 22 18 Number of shipments 18 30 42 Number of items stored 3,600 5,200 8,800 Order value $240,000 $185,000 $320,000 What are the total warehouse service costs charged to Client Z for the quarter?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter5: Activity-based Costing And Management

Section: Chapter Questions

Problem 57P: Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account...

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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?
a-1. What is the cost per unit for paychecks processed? a-2. What is the cost per unit for customer accounts maintained? a-3. What is the cost per unit for special analyses performed? b. Assuming the followiing level of cost-driver volumes for a month, what are the accounting department's estimated costs of doing busines using the account analysis approach? -1000 paycheck processed -200 customer accounts maintained -3 special analyses
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 Customer deliveries (Number of deliveries) $ 400,000 8,000 deliveries Manual order processing (Number of manual orders) $ 280,000 5,000 manual orders Electronic order processing (Number of electronic orders) $ 150,000 15,000 electronic orders Line item picking (Number of line items picked) $ 450,000 375,000 line items Other organization-sustaining costs (None) $ 300,000 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 Measure Activity Hospital A Hospital B Number of deliveries 10 25 Number of manual orders 0 30 Number of electronic orders 15 0 Number of line items picked 125 250 How much total activity cost should be assigned to Hospital A for internal…
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 Customer deliveries (Number of deliveries) $ 400,000 8,000 deliveries Manual order processing (Number of manual orders) $ 280,000 5,000 manual orders Electronic order processing (Number of electronic orders) $ 150,000 15,000 electronic orders Line item picking (Number of line items picked) $ 450,000 375,000 line items Other organization-sustaining costs (None) $ 300,000 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 Measure Activity Hospital A Hospital B Number of deliveries 10 25 Number of manual orders 0 31 Number of electronic orders 15 0 Number of line items picked 120 250 How much cost would be assigned from the Manual Order Processing activity to…
How much of the customer support cost will be assigned to department X?
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Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account profitability by customer type. Customers are categorized according to the size of their account: low balances, medium balances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows: Additional data concerning the usage of the activities by the various customers are also provided: Required: (Note: Round answers to two decimal places.) 1. Calculate a cost per account per year by dividing the total cost of processing and maintaining checking accounts by the total number of accounts. What is the average fee per month that the bank should charge to cover the costs incurred because of checking accounts? 2. Calculate a cost per account by customer category by using activity rates. 3. Currently, the bank offers free checking to all of its customers. The interest revenues average 90 per account; however, the interest revenues earned per account by category are 80, 100, and 165 for the low-, medium-, and high-balance accounts, respectively. Calculate the average profit per account (average revenue minus average cost from Requirement 1). Then calculate the profit per account by using the revenue per customer type and the unit cost per customer type calculated in Requirement 2. 4. CONCEPTUAL CONNECTION After the analysis in Requirement 3, a vice president recommended eliminating the free checking feature for low-balance customers. The bank president expressed reluctance to do so, arguing that the low-balance customers more than made up for the loss through cross-sales. He presented a survey that showed that 50% of the customers would switch banks if a checking fee were imposed. Explain how you could verify the presidents argument by using ABC.
Thayne Company has 30 clerks that work in its Accounts Payable Department. A study revealed the following activities and the relative time demanded by each activity: Required: Classify the four activities as value-added or non-value-added, and calculate the clerical cost of each activity. For non-value-added activities, indicate why they are non-value-added.
Ohio Logistics manages the logistical activities for firms by matching companies that need products shipped with carriers that can provide the best rates and best service for the companies. Ohio Logistics is very concerned that its carriers deliver their customers material on time, so it carefully monitors the percentage of on-time deliveries. The following table contains a list of the carriers used by Ohio Logistics and the corresponding on-time percentages for the current and previous years. a. Sort the carriers in descending order by their current years percentage of on-time deliveries. Which carrier is providing the best service in the current year? Which carrier is providing the worst service in the current year? b. Calculate the change in percentage of on-time deliveries from the previous to the current year for each carrier. Use Excels conditional formatting to highlight the carriers whose on-time percentage decreased from the previous year to the current year. c. Use Excels conditional formatting tool to create data bars for the change in percentage of on-time deliveries from the previous year to the current year for each carrier calculated in part b. d. Which carriers should Ohio Logistics try to use in the future? Why?
Answer both subparts 1 and 2.if answered within 30mins,it would be apprecaible!!
Caldwell Supply, a wholesaler, has determined that its operations have three primary activities: purchasing, warehousing, and distributing. The firm reports the following operating data for the year just completed: Activity Cost Driver Quantity of Cost Driver Cost per Unit of Cost Driver Purchasing Number of purchase orders 1,060 $156 per order Warehousing Number of moves 8,600 $36 per move Distributing Number of shipments 560 $86 per shipment Caldwell buys 100,600 units at an average unit cost of $16 and sells them at an average unit price of $26. The firm also has fixed operating costs of $250,600 for the year. Caldwell’s customers are demanding a 16% discount for the coming year. The company expects to sell the same amount if the demand for price reduction can be met. Caldwell’s suppliers, however, are willing to give only a 10% discount. Required:Caldwell has estimated that it can reduce the number of purchase orders to 740 and can…
Caldwell Supply, a wholesaler, has determined that its operations have three primary activities: purchasing, warehousing, and distributing. The firm reports the following operating data for the year just completed: Driver $162 per order Activity Purchasing Warehousing Distributing Cost Driver Quantity of Cost Driver Cost per Unit of Cost Number of purchase orders 1,120 Number of moves 8,100 620 Number of shipments 31 per move 92 per shipment Caldwell buys 101,200 units at an average unit cost of $11 and sells them at an average unit price of $21. The firm also has fixed operating costs of $251,200 for the year. Caldwell's customers are demanding a 11% discount for the coming year. The company expects to sell the same amount if the demand for price reduction can be met. Caldwell's suppliers, however, are willing to give only a 3% discount. Required: Caldwell has estimated that it can reduce the number of purchase orders to 800 and can decrease the cost of each shipment by $15 with minor…