42) Republic Industries decides to price delivery services according to the results of a recent
activity-based costing (ABC) study. The study indicates Republic should charge $8 per order,
2% of annual order value for general delivery costs, $1.25 per item, and $30 for delivery.
A year later, Republic collected the following information for two of its best customers:
Cost driver Customer C Customer D
Number of orders 18 8
Number of deliveries 10 10
Total number of items 2,000 4,000
Annual order value $ 120,000 $ 80,000
What are the total delivery costs charged to Customer C during the year?
A) $5,344.
B) $5,364.
C) $6,900.
D) $6,964.
43) Benton Company is preparing its annual profit plan. As part of its analysis of the cost of its
purchasing activity, management estimates that the $48,000 for purchasing support should be
assigned to the individual vendors from the information given as follows:
Vendor A Vendor B
Units purchased 100,000 200,000
Purchase orders (annual) 6 24
Number of shipments received 12 52
What is the amount of the purchasing costs that should be allocated to Vendor A, assuming
Benton uses units purchased to compute activity-based costs?
A) $9,600.
B) $16,000.
C) $32,000.
D) $38,400.
44) Benton Company is preparing its annual profit plan. As part of its analysis of the cost of its
purchasing activity, management estimates that the $48,000 for purchasing support should be
assigned to the individual vendors from the information given as follows:
Vendor A Vendor B
Units purchased 100,000 200,000
Purchase orders (annual) 6 24
Number of shipments received 12 52
What is the amount of the purchasing costs that should be allocated to Vendor B, assuming
Benton uses units purchased to compute activity-based costs?
A) $9,600.
B) $16,000.
C) $32,000.
D) $38,400.
45) Benton Company is preparing its annual profit plan. As part of its analysis of the cost of its
purchasing activity, management estimates that the $48,000 for purchasing support should be
assigned to the individual vendors from the information given as follows:
Vendor A Vendor B
Units purchased 100,000 200,000
Purchase orders (annual) 6 24
Number of shipments received 12 52
What is the amount of the purchasing costs that should be allocated to Vendor A, assuming
Benton uses purchases orders to compute activity-based costs?
A) $9,600.
B) $16,000.
C) $32,000.
D) $38,400.
46) Benton Company is preparing its annual profit plan. As part of its analysis of the cost of its
purchasing activity, management estimates that the $48,000 for purchasing support should be
assigned to the individual vendors from the information given as follows:
Vendor A Vendor B
Units purchased 100,000 200,000
Purchase orders (annual) 6 24
Number of shipments received 12 52
What is the amount of the purchasing costs that should be allocated to Vendor B, assuming
Benton uses purchases orders to compute activity-based costs?
A) $9,600.
B) $16,000.
C) $32,000.
D) $38,400.
47) Benton Company is preparing its annual profit plan. As part of its analysis of the cost of its
purchasing activity, management estimates that the $48,000 for purchasing support should be
assigned to the individual vendors from the information given as follows:
Vendor A Vendor B
Units purchased 100,000 200,000
Purchase orders (annual) 6 24
Number of shipments received 12 52
What is the amount of the purchasing costs that should be allocated to Vendor A, assuming
Benton uses number of shipments received to compute activity-based costs?
A) $9,000.
B) $16,000.
C) $32,000.
D) $39,000.
48) Benton Company is preparing its annual profit plan. As part of its analysis of the cost of its
purchasing activity, management estimates that the $48,000 for purchasing support should be
assigned to the individual vendors from the information given as follows:
Vendor A Vendor B
Units purchased 100,000 200,000
Purchase orders (annual) 6 24
Number of shipments received 12 52
What is the amount of the purchasing costs that should be allocated to Vendor B, assuming
Benton uses number of shipments received to compute activity-based costs?
A) $9,000.
B) $16,000.
C) $32,000.
D) $39,000.
49) Express Travel decides to price delivery services according to the results of a recent activity-
based costing (ABC) study. The study indicates Express Travel should charge $16 per order, 1%
of annual order value for general delivery costs, $2.50 per item, and $45 for delivery.
A year later, Express Travel collected the following information for three of its customers:
Cost driver Customer A Customer B Customer C
Number of orders 18 8 12
Number of deliveries 10 10 24
Total number of items 2,000 4,000 12,000
Annual order value $ 120,000 $ 80,000 $ 100,000
What are the total delivery costs charged to Customer A during the year?
A) $5,738.
B) $6,650.
C) $6,938.
D) $20,235.
50) Express Travel decides to price delivery services according to the results of a recent activity-
based costing (ABC) study. The study indicates Express Travel should charge $16 per order, 1%
of annual order value for general delivery costs, $2.50 per item, and $45 for delivery.
A year later, Express Travel collected the following information for three of its customers:
Cost driver Customer A Customer B Customer C
Number of orders 18 8 12
Number of deliveries 10 10 24
Total number of items 2,000 4,000 12,000
Annual order value $ 120,000 $ 80,000 $ 100,000
What are the total delivery costs charged to Customer B during the year?
A) $13,490.
B) $11,378.
C) $10,800.
D) $10,578.
51) Express Travel decides to price delivery service according to the results of a recent activity-
based costing (ABC) study. The study indicates Express Travel should charge $16 per order, 1%
of annual order value for general delivery costs, $2.50 per item, and $45 for delivery.
A year later, Express Travel collected the following information for three of its customers:
Cost driver Customer A Customer B Customer C
Number of orders 18 8 12
Number of deliveries 10 10 24
Total number of items 2,000 4,000 12,000
Annual order value $ 120,000 $ 80,000 $ 100,000
What are the total delivery costs charged to Customer C during the year?
A) $16,863.
B) $20,000.
C) $31,272.
D) $32,272.
52) Activity-based costing (ABC) information cannot be used by managerial decision-makers to
evaluate the:
A) profitability of a customer.
B) market potential of a product.
C) cost of using a particular supplier.
D) whether to continue providing a service.
53) Crafter Lumber Supply noticed a recent decline in the amount of purchases from a key
customer. Worried that other customers might also reduce their purchases, Crafter’s management
decided to evaluate the cost of its delivery service. Which of the following cost drivers is more
appropriate for general administrative costs of the Delivery Department?
A) Number of different items ordered.
B) Value of each order.
C) Total number of items in each order.
D) Number of deliveries made.
54) The unused resource capacity is the difference between the resources supplied and the
resources:
A) purchased.
B) wasted.
C) used.
D) on hand.
55) The amount of resources used in an activity-based costing (ABC) system for a specific
activity is computed by multiplying the:
A) cost driver rate by the actual cost driver volume.
B) cost driver rate by the planned cost driver volume.
C) overhead rate by the actual cost driver volume.
D) overhead rate by the planned cost driver volume.
56) South Beach Industries reports the following information about resources. At the beginning
of the year, South Beach estimated it would spend $180,000 for materials, $42,000 for
purchasing, $35,000 for setups, and $36,000 for repairs.
Cost Driver
Rate Volume
Resources used:
Materials $ 10 /lb 18,350 lbs
Purchasing $ 250 /purchase order 160 purchase orders
Setups $ 450 /setup 80 setups
Repairs $ 36 /job 700 jobs
Resources supplied:
Materials $ 192,700
Purchasing $ 44,300
Setups $ 37,500
Repairs $ 30,000
The unused resource capacity for materials for South Beach is:
A) $12,700.
B) $3,500.
C) $19,270.
D) $9,200.
57) South Beach Industries reports the following information about resources. At the beginning
of the year, South Beach estimated it would spend $180,000 for materials, $42,000 for
purchasing, $35,000 for setups, and $36,000 for repairs.
Cost Driver
Rate Volume
Resources used:
Materials $ 10 /lb 18,350 lbs
Purchasing $ 250 /purchase order 160 purchase orders
Setups $ 450 /setup 80 setups
Repairs $ 36 /job 700 jobs
Resources supplied:
Materials $ 192,700
Purchasing $ 44,300
Setups $ 37,500
Repairs $ 30,000
The unused resource capacity for purchasing for South Beach is:
A) $5,538.
B) $2,000.
C) $4,300.
D) $2,300.
58) South Beach Industries reports the following information about resources. At the beginning
of the year, South Beach estimated it would spend $180,000 for materials, $42,000 for
purchasing, $35,000 for setups, and $36,000 for repairs.
Cost Driver
Rate Volume
Resources used:
Materials $ 10 /lb 18,350 lbs
Purchasing $ 250 /purchase order 160 purchase orders
Setups $ 450 /setup 80 setups
Repairs $ 36 /job 700 jobs
Resources supplied:
Materials $ 192,700
Purchasing $ 44,300
Setups $ 37,500
Repairs $ 30,000
The unused resource capacity for setups for South Beach is:
A) $2,500.
B) $1,080.
C) $1,500.
D) $1,000.
59) South Beach Industries reports the following information about resources. At the beginning
of the year, South Beach estimated it would spend $180,000 for materials, $42,000 for
purchasing, $35,000 for setups, and $36,000 for repairs.
Cost Driver
Rate Volume
Resources used:
Materials $ 10 /lb 18,350 lbs
Purchasing $ 250 /purchase order 160 purchase orders
Setups $ 450 /setup 80 setups
Repairs $ 36 /job 700 jobs
Resources supplied:
Materials $ 192,700
Purchasing $ 44,300
Setups $ 37,500
Repairs $ 30,000
The unused resource capacity for repairs for South Beach is:
A) $4,800.
B) $10,800.
C) $6,000.
D) $3,600.
60) Macon Publishing reports the following information about resources. At the beginning of the
year, Macon estimated it would spend $42,000 for setups and $21,000 for clerical.
Cost Driver
Rate Volume
Resources used:
Setups $ 250 175 runs
Clerical $ 30 500 pages typed
Resources supplied:
Setups $ 45,000
Clerical 20,000
The unused resource capacity for setups for Macon Publishing is:
A) $1,250.
B) $3,000.
C) $1,750.
D) $5,000.
61) Macon Publishing reports the following information about resources. At the beginning of the
year, Macon estimated it would spend $42,000 for setups and $21,000 for clerical.
Cost Driver
Rate Volume
Resources used:
Setups $ 250 175 runs
Clerical $ 30 500 pages typed
Resources supplied:
Setups $ 45,000
Clerical 20,000
The unused resource capacity for clerical for Macon Publishing is:
A) $5,000.
B) $1,000.
C) $6,000.
D) $1,260.
62) Denim Products reports the following information about resources. At the beginning of the
year, Denim estimated it would spend $84,000 for setups and $41,000 for quality testing.
Cost Driver
Rate Volume
Resources used:
Setups $ 250 /run 350 runs
Quality testing $ 40 /test 900 tests
Resources supplied:
Setups $ 90,000
Quality testing $ 40,000
The unused resource capacity for setups for Denim Products is:
A) $6,000.
B) $2,500.
C) $1,000.
D) $3,500.
63) Denim Products reports the following information about resources. At the beginning of the
year, Denim estimated it would spend $84,000 for setups and $41,000 for quality testing.
Cost Driver
Rate Volume
Resources used:
Setups $ 250 /run 350 runs
Quality testing 40 /test 900 tests
Resources supplied:
Setups $ 90,000
Quality testing 40,000
The unused resource capacity for quality testing for Denim Products is:
A) $4,000.
B) $2,000.
C) $1,000.
D) $5,000.