Connect Access Card For Fundamental Accounting Principles
Connect Access Card For Fundamental Accounting Principles
24th Edition
ISBN: 9781260158526
Author: John J Wild
Publisher: McGraw-Hill Education
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Chapter C, Problem 5QS
To determine

1. Introduction:

Activity Based Costing

  • Activity Based Costing is a method of cost allocation, whereby costs are assigned to activities performed and cost per unit of activity driver is calculated and assigned to units of activities performed.
  • Activity drivers could be cost allocation units such as orders, batches, area occupied etc. Activity based costing favors cost allocation on the actual units of activity carried out as opposed to the standard method of overhead application using a blanket rate.
  •   Cost of Activity = Units of Activity performed x Cost per Activity Driver

Overhead cost per unit for the standard units

To determine

2. Introduction:

Activity Based Costing

  • Activity Based Costing is a method of cost allocation, whereby costs are assigned to activities performed and cost per unit of activity driver is calculated and assigned to units of activities performed.
  • Activity drivers could be cost allocation units such as orders, batches, area occupied etc. Activity based costing favors cost allocation on the actual units of activity carried out as opposed to the standard method of overhead application using a blanket rate.
  •   Cost of Activity = Units of Activity performed x Cost per Activity Driver

Overhead cost per unit for the deluxe units

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Phil Corp. had thefollowing transactions during 2019: -Sales of $8820 on account. -Collected $3920 for services to be performed in 2020. -Paid $3680 cash in salaries for2019. -Purchased airline tickets for $490 in December for a trip to take place in 2020. What is Phil's 2019 net income using accrual accounting? a. $5630 b. $9060 c.$9550 d. $5140
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