OFC Company of Kansas City prints business forms and other specialty paper products, such as writing paper, envelopes, note cards, and greeting cards. Its Business Services division offers Inventory management services and desktop delivery on request. The division uses an activity-based costing (ABC) system. The budgeted usage of each activity cost driver and cost-driver rates for January 2019 for the Business Services division are: Activity Storage Requisition handling Pick packing Data entry Cost Driver Cartons in inventory Requisitions Lines Lines Budgeted Activity 470,e0e 44,e0e 835,e0e 835,000 37,e0e 15,5ee Cost-Driver Rate s 8.5720 /carton/month 20.se 1.64 e.81 1.23 Requisitions Per delivery Desktop delivery 40.e0 For the month, the division expects to make 10,600 deliveries to deliver 1,060,000 cartons to customers. OFC Company has decided to Implement a kaizen (continuous-Improvement) program to enhance operational efficiency. After a careful study, management and employees agree that the firm wili be able to reduce cost rates for batch-level activitles by 2% and unit-level activities (other than Storage) by 1% per month during the first year of the program starting February 2019. The firm has decided to delay the Implementation of the program for customer-sustaining and facility-level activities until 2020. The firm expects the amount of cost-driver usage In each of the next two months to be the same as those in January. Requlred: 1. Identify unit-level and batch-level activitles. 2 What are the total budgeted costs for each activity and for the division as a whole in February and March?
OFC Company of Kansas City prints business forms and other specialty paper products, such as writing paper, envelopes, note cards, and greeting cards. Its Business Services division offers Inventory management services and desktop delivery on request. The division uses an activity-based costing (ABC) system. The budgeted usage of each activity cost driver and cost-driver rates for January 2019 for the Business Services division are: Activity Storage Requisition handling Pick packing Data entry Cost Driver Cartons in inventory Requisitions Lines Lines Budgeted Activity 470,e0e 44,e0e 835,e0e 835,000 37,e0e 15,5ee Cost-Driver Rate s 8.5720 /carton/month 20.se 1.64 e.81 1.23 Requisitions Per delivery Desktop delivery 40.e0 For the month, the division expects to make 10,600 deliveries to deliver 1,060,000 cartons to customers. OFC Company has decided to Implement a kaizen (continuous-Improvement) program to enhance operational efficiency. After a careful study, management and employees agree that the firm wili be able to reduce cost rates for batch-level activitles by 2% and unit-level activities (other than Storage) by 1% per month during the first year of the program starting February 2019. The firm has decided to delay the Implementation of the program for customer-sustaining and facility-level activities until 2020. The firm expects the amount of cost-driver usage In each of the next two months to be the same as those in January. Requlred: 1. Identify unit-level and batch-level activitles. 2 What are the total budgeted costs for each activity and for the division as a whole in February and March?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Answer both subparts 1 and 2.if answered within 30mins,it would be apprecaible!!
![Requlred Informatlon
[The following information applies to the questions displayed below.]
OFC Company of Kansas City prints business forms and other specialty paper products, such as writing paper, envelopes,
note cards, and greeting cards. Its Business Services division offers Inventory management services and desktop delivery
on request. The division uses an activity-based costing (ABC) system. The budgeted usage of each activity cost driver and
cost-driver rates for January 2019 for the Business Services division are:
Budgeted
Activity
470,000
Activity
Cost Driver
Cost-Driver Rate
Cartons in inventory
Requisitions
$ 8.5720 /carton/month
Storage
Requisition handling
Pick packing
Data entry
20.50
44,000
835,000
835,000
37,000
15,500
Lines
1.64
Lines
e.81
Requisitions
Per delivery
1.23
Desktop delivery
40.00
For the month, the division expects to make 10,600 deliverles to deliver 1,060,000 cartons to customers.
OFC Company has decided to Implement a kaizen (continuous-Improvement) program to enhance operational efficiency. After a
careful study, management and employees agree that the firm will be able to reduce cost rates for batch-level activities by 2% and
unit-level activitles (other than Storage) by 1% per month during the first year of the program starting February 2019. The firm has
decided to delay the Implementation of the program for customer-sustaining and facility-level activities until 2020. The firm expects
the amount of cost-driver usage in each of the next two months to be the same as those in January.
Requlred:
1. Identify unit-level and batch-level activitles.
2 What are the total budgeted costs for each activity and for the division as a whole In February and March?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
What are the total budgeted costs for each activity and for the division as a whole in February and March? (Do not round
intermediate calculations.)
Budgeted Costs
Activity
February
March
Storage
Requisition handling
Pick packing
Data entry-Lines
Data entry-Requisitions
Desktop delivery
Divisional totals](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0bdd1611-1e2b-4a2e-a83f-a5d373e0ed39%2Fc6ad9a2c-7089-41c7-a5ec-95b288492319%2F10a6pd8_processed.png&w=3840&q=75)
Transcribed Image Text:Requlred Informatlon
[The following information applies to the questions displayed below.]
OFC Company of Kansas City prints business forms and other specialty paper products, such as writing paper, envelopes,
note cards, and greeting cards. Its Business Services division offers Inventory management services and desktop delivery
on request. The division uses an activity-based costing (ABC) system. The budgeted usage of each activity cost driver and
cost-driver rates for January 2019 for the Business Services division are:
Budgeted
Activity
470,000
Activity
Cost Driver
Cost-Driver Rate
Cartons in inventory
Requisitions
$ 8.5720 /carton/month
Storage
Requisition handling
Pick packing
Data entry
20.50
44,000
835,000
835,000
37,000
15,500
Lines
1.64
Lines
e.81
Requisitions
Per delivery
1.23
Desktop delivery
40.00
For the month, the division expects to make 10,600 deliverles to deliver 1,060,000 cartons to customers.
OFC Company has decided to Implement a kaizen (continuous-Improvement) program to enhance operational efficiency. After a
careful study, management and employees agree that the firm will be able to reduce cost rates for batch-level activities by 2% and
unit-level activitles (other than Storage) by 1% per month during the first year of the program starting February 2019. The firm has
decided to delay the Implementation of the program for customer-sustaining and facility-level activities until 2020. The firm expects
the amount of cost-driver usage in each of the next two months to be the same as those in January.
Requlred:
1. Identify unit-level and batch-level activitles.
2 What are the total budgeted costs for each activity and for the division as a whole In February and March?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
What are the total budgeted costs for each activity and for the division as a whole in February and March? (Do not round
intermediate calculations.)
Budgeted Costs
Activity
February
March
Storage
Requisition handling
Pick packing
Data entry-Lines
Data entry-Requisitions
Desktop delivery
Divisional totals
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