Concept introduction:
Activity-based costing (ABC):
Activity-based costing refers to the method of costing where the
Requirement 1:
Calculate the total revenue from the University and Memorial.
Concept explanation:
Activity rate:
The activity rate is determined by dividing the net activity cost, with the total number of activities. The calculation of the activity rate is the second step in the implementation of activity-based costing. After establishing the relationship between the overheads and the activity, the management has to ascertain the activity rate for that specific activity.
Requirement 2:
Calculate the activity for the given activity cost pools.
Concept introduction:
Activity rate:
The activity rate is determined by dividing the net activity cost, with the total number of activities. The calculation of the activity rate is the second step in the implementation of activity-based costing. After establishing the relationship between the overheads and the activity, the management has to ascertain the activity rate for that specific activity.
Requirement 3:
Calculate the total activity costs for both the departments.
Concept introduction:
Profit margin:
The profit margin is the percentage charged by the seller on the sale of the goods. The difference between the sales price and the cost price of the product is known as the profit margin.
Requirement 4:
Calculate the customer margin for University and Memorial.
Concept introduction:
Profit margin:
The profit margin is the percentage charged by the seller on the sale of the goods. The difference between the sales price and the cost price of the product is known as profit margin.
Requirement 5:
Determine the purchasing behavior characterized as the least profitable customers.
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Chapter 5 Solutions
MANAGERIAL ACCOUNTING F/..(LL)-W/ACCESS
- Accounting question is correct answer with solutionarrow_forwardThe industrial enterprise "HUANG S.A." purchased a sorting and packaging machine from a foreign company on 1/4/2017 at a cost of €500,000. The useful life of the machine was estimated by the Management at ten (10) years, while the residual value was estimated at zero. For the transportation of the machine from abroad to the company's factory, the amount of €20,000 was paid on 15/4/2017. As the insurance coverage of the machine during transportation was the responsibility of the selling company, HUANG S.A. proceeded to insure the machine from 16/4/2017 to 15/4/2018, paying the amount of €1,200. The delivery took place on 15/4/2017. As adequate ventilation of the multifunction device is essential for its proper operation, the company fitted an air duct on the multifunction device. The cost of the air duct amounted to €2,000 and was paid on 20/4/2017. On 25/4/2017, an external electrician was paid €5,000 for the electrical connection of the device. The company also paid €5,000 to an…arrow_forwardprovide correct answer of this General accounting questionarrow_forward
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