Required information [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: Activity Storage Requisition handling Pick packing Data entry Requisitions Desktop delivery Per delivery For the month, the division expects to make 12,000 deliveries to deliver 1,200,000 cartons to customers. Cost Driver Cartons in inventory Requisitions Budgeted Activity 600,000 70,000 900,000 900,000 50,000 22,000 Lines Lines Cost-Driver Rate $0.5820/carton/month 19.50 1.56 0.99 1.23 41.00 Required: 1. What is the total budgeted cost for each activity and for the Business Services division in January 2019? 2. Assume, in contrast to requirement 1, that activity-related information was not available. Rather, the only information available is that the budgeted fixed costs for the month are $1,160,000, and the budgeted variable cost per carton is estimated as $3.00. What is the budgeted total cost for the month using this single volume-based approach? 3. Dories Supply Chain Management Company offers to install an electronic order-processing system that transmits customer requisitions via the Internet to the Business Services division for immediate pick, packing, and delivery. No requisition handling and data entry will be needed once the system is fully functional. How much savings can the Business Services division expect from switching to the new system before considering the payment to Dories?
Required information [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: Activity Storage Requisition handling Pick packing Data entry Requisitions Desktop delivery Per delivery For the month, the division expects to make 12,000 deliveries to deliver 1,200,000 cartons to customers. Cost Driver Cartons in inventory Requisitions Budgeted Activity 600,000 70,000 900,000 900,000 50,000 22,000 Lines Lines Cost-Driver Rate $0.5820/carton/month 19.50 1.56 0.99 1.23 41.00 Required: 1. What is the total budgeted cost for each activity and for the Business Services division in January 2019? 2. Assume, in contrast to requirement 1, that activity-related information was not available. Rather, the only information available is that the budgeted fixed costs for the month are $1,160,000, and the budgeted variable cost per carton is estimated as $3.00. What is the budgeted total cost for the month using this single volume-based approach? 3. Dories Supply Chain Management Company offers to install an electronic order-processing system that transmits customer requisitions via the Internet to the Business Services division for immediate pick, packing, and delivery. No requisition handling and data entry will be needed once the system is fully functional. How much savings can the Business Services division expect from switching to the new system before considering the payment to Dories?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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![Required information
[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:
Activity
Storage
Requisition handling
Pick packing
Data entry
Required 1 Re
Desktop delivery
For the month, the division expects to make 12,000 deliveries to deliver 1,200,000 cartons to customers.
Activity
Cost Driver
Cartons in inventory
Requisitions
Required:
1. What is the total budgeted cost for each activity and for the Business Services division in January 2019?
2. Assume, in contrast to requirement 1, that activity-related information was not available. Rather, the only information available is that
the budgeted fixed costs for the month are $1,160,000, and the budgeted variable cost per carton is estimated as $3.00. What is the
budgeted total cost for the month using this single volume-based approach?
3. Dories Supply Chain Management Company offers to install an electronic order-processing system that transmits customer
requisitions via the Internet to the Business Services division for immediate pick, packing, and delivery. No requisition handling and
data entry will be needed once the system is fully functional. How much savings can the Business Services division expect from
switching to the new system before considering the payment to Dories?
Complete this question by entering your answers in the tabs below.
Storage
Requisition handling
Lines
Lines
2 Required 3
Pick packing
Data entry-Lines
Data entry-Requisitions
Desktop delivery
Requisitions
Per delivery
Total budgeted cost for the division
What is the total budgeted cost for each activity and for the Business Services division in January 2019?
Budgeted
Activity
600,000
70,000
900,000
900,000
50,000
22,000
Total Cost
Cost-Driver Rate
$0.5820 /carton/month
19.50
1.56
0.99
1.23
41.00
$
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4f9ab4d5-fd75-4b09-8c85-55b02c367958%2F93eddf54-f440-4be5-802a-058432c2b7d0%2F6v6q98h_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[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:
Activity
Storage
Requisition handling
Pick packing
Data entry
Required 1 Re
Desktop delivery
For the month, the division expects to make 12,000 deliveries to deliver 1,200,000 cartons to customers.
Activity
Cost Driver
Cartons in inventory
Requisitions
Required:
1. What is the total budgeted cost for each activity and for the Business Services division in January 2019?
2. Assume, in contrast to requirement 1, that activity-related information was not available. Rather, the only information available is that
the budgeted fixed costs for the month are $1,160,000, and the budgeted variable cost per carton is estimated as $3.00. What is the
budgeted total cost for the month using this single volume-based approach?
3. Dories Supply Chain Management Company offers to install an electronic order-processing system that transmits customer
requisitions via the Internet to the Business Services division for immediate pick, packing, and delivery. No requisition handling and
data entry will be needed once the system is fully functional. How much savings can the Business Services division expect from
switching to the new system before considering the payment to Dories?
Complete this question by entering your answers in the tabs below.
Storage
Requisition handling
Lines
Lines
2 Required 3
Pick packing
Data entry-Lines
Data entry-Requisitions
Desktop delivery
Requisitions
Per delivery
Total budgeted cost for the division
What is the total budgeted cost for each activity and for the Business Services division in January 2019?
Budgeted
Activity
600,000
70,000
900,000
900,000
50,000
22,000
Total Cost
Cost-Driver Rate
$0.5820 /carton/month
19.50
1.56
0.99
1.23
41.00
$
0
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