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Student name:__________
1) Daher Corporation manufactures two products: Product A34R and Product E05V. The
company uses a plantwide overhead rate based on direct labor-hours. It is considering
implementing an activity-based costing (ABC) system that allocates all of its manufacturing
overhead to four cost pools. The following additional information is available for the company as
a whole and for Products A34R and E05V.
Activity Cost Pool Activity Measure Total Cost Total
Activity
Machining Machine-hours $ 95,000 5,000 MHs
Machine setups Number of setups $ 80,000 200
setups
Product design Number of products $ 96,000 2 products
Order size Direct labor-hours $ 310,000 10,000
DLHs
Activity Measure Product A34R Product E05V
Machine-hours 2,000 3,000
Number of setups 150 50
Number of products 1 1
Direct labor-hours 3,000 7,000
Required:
a. What is the company’s plantwide overhead rate?
b. Using the plantwide overhead rate, how much manufacturing overhead cost would be
allocated to Product E05V?
c. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to
Product A34R?
2) Vito Corporation manufactures two products: Product F77I and Product I48D. The
company uses a plantwide overhead rate based on direct labor-hours. It is considering
implementing an activity-based costing (ABC) system that allocates its manufacturing overhead
to four cost pools. The following additional information is available for the company as a whole
and for Products F77I and I48D.
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Activity Cost Pool Activity Measure Total Cost Total
Activity
Machining Machine-hours $ 207,000 9,000 MHs
Machine setups Number of setups $ 120,000 300
setups
Product design Number of products $ 76,000 2 products
Order size Direct labor-hours $ 330,000 10,000
DLHs
Activity Measure Product F77I Product I48D
Machine-hours 6,000 3,000
Number of setups 120 180
Number of products 1 1
Direct labor-hours 7,000 3,000
Required:
a. What is the company’s plantwide overhead rate?
b. Using the plantwide overhead rate, how much manufacturing overhead cost would be
allocated to Product F77I?
c. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to
Product I48D?
3) Desilets Corporation has provided the following data from its activity-based costing
accounting system:
Supervisory wages $ 82,100
Factory utilities $ 284,000
Distribution of Resource Consumption across Activity Cost Pools:
Activity Cost Pools Batch Set-Ups Unit Processing
Other Total
Supervisory wages 62% 34% 4% 100%
Factory utilities 34% 61% 5% 100%
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The “Other” activity cost pool consists of the costs of idle capacity and organization-sustaining
costs that are not assigned to products.
Required:
a. Determine the total amount of supervisory wages and factory utilities costs that would be
allocated to the Unit Processing activity cost pool.
b. Determine the total amount of supervisory wages and factory utilities costs that would NOT
be assigned to products.
4) The following data have been provided by Hooey Corporation from its activity-based
costing accounting system:
Supervisory wages $ 66,000
Factory utilities $ 219,000
Distribution of Resource Consumption across Activity Cost Pools:
Activity Cost Pools Product Changeovers Machining Other
Total
Supervisory wages 59% 33% 8% 100%
Factory utilities 18% 73% 9% 100%
The “Other” activity cost pool consists of the costs of idle capacity and organization-sustaining
costs that are not assigned to products.
Required:
a. Determine the total amount of supervisory wages and factory utilities costs that would be
allocated to the Machining activity cost pool.
b. Determine the total amount of supervisory wages and factory utilities costs that would NOT
be assigned to products.
5) Beckley Corporation has provided the following data from its activity-based costing
accounting system:
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Indirect factory wages $ 26,000
Factory equipment depreciation $ 203,000
Distribution of Resource Consumption across Activity Cost Pools:
Activity Cost Pools Customer Orders Product
Processing Other Total
Indirect factory wages 48% 47% 5% 100%
Factory equipment depreciation 62% 24% 14% 100%
The “Other” activity cost pool consists of the costs of idle capacity and organization-sustaining
costs that are not assigned to products.
Required:
a. Determine the total amount of indirect factory wages and factory equipment depreciation
costs that would be allocated to the Product Processing activity cost pool.
b. Determine the total amount of indirect factory wages and factory equipment depreciation
costs that would NOT be assigned to products.
6) Aresco Corporation manufactures two products: Product G51B and Product E48X. The
company uses a plantwide overhead rate based on direct labor-hours. It is considering
implementing an activity-based costing (ABC) system that allocates all of its manufacturing
overhead to four cost pools. The following additional information is available for the company as
a whole and for Products G51B and E48X.
Activity Cost Pool Activity Measure Total Cost Total
Activity
Machining Machine-hours $ 100,000 5,000 MHs
Machine setups Number of setups $ 300,000 500
setups
Product design Number of products $ 80,000 2 products
Order size Direct labor-hours $ 350,000 10,000
DLHs
Activity Measure Product G51B Product E48X
Machine-hours 2,000 3,000
Number of setups 270 230
Number of products 1 1
Direct labor-hours 3,000 7,000
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Required:
a. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to
Product G51B?
b. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to
Product E48X?
c. Using theactivity-based costing system, what percentage of the total overhead cost is
assigned to Product G51B?
d. Using theactivity-based costing system, what percentage of the total overhead cost is
assigned to Product E48X?
7) Losser Corporation manufactures two products: Product L73Z and Product A79B. The
company uses a plantwide overhead rate based on direct labor-hours. It is considering
implementing an activity-based costing (ABC) system that allocates all of its manufacturing
overhead to four cost pools. The following additional information is available for the company as
a whole and for Products L73Z and A79B.
Activity Cost Pool Activity Measure Total Cost Total
Activity
Machining Machine-hours $ 144,000 9,000 MHs
Machine setups Number of setups $ 100,000 250
setups
Product design Number of products $ 52,000 2 products
Order size Direct labor-hours $ 280,000 10,000
DLHs
Activity Measure Product L73Z Product A79B
Machine-hours 5,000 4,000
Number of setups 100 150
Number of products 1 1
Direct labor-hours 3,000 7,000
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Required:
a. Using the plantwide overhead rate, how much manufacturing overhead cost would be
allocated to Product L73Z?
b. Using the plantwide overhead rate, how much manufacturing overhead cost would be
allocated to Product A79B?
c. Using theABC system, how much total manufacturing overhead cost would be assigned to
Product A79B?
d. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to
Product L73Z?
8) Moorman Corporation has an activity-based costing system with three activity cost pools-
-Processing, Setting Up, and Other. The company’s overhead costs consist of equipment
depreciation and indirect labor and are allocated to the cost pools in proportion to the activity
cost pools’ consumption of resources. Equipment depreciation totals $55,000 and indirect labor
totals $6,000. Data concerning the distribution of resource consumption across activity cost pools
appear below:
Processing Setting Up Other
Equipment depreciation 0.55 0.10 0.35
Indirect labor 0.20 0.10 0.70
Required:
Assign overhead costs to activity cost pools using activity-based costing.
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9) Figge and Mathews PLC, a consulting firm, uses an activity-based costing in which there
are three activity cost pools. The company has provided the following data concerning its costs
and its activity based costing system:
Costs:
Wages and salaries $ 505,000
Travel expenses 205,000
Other expenses 265,000
Total $ 975,000
Distribution of resource consumption:
Activity Cost Pools Total
Working On Engagements Business Development Other
Wages and salaries 45% 30% 25% 100%
Travel expenses 40% 40% 20% 100%
Other expenses 25% 40% 35% 100%
Required:
a. How much cost, in total, would be allocated to the Working On Engagements activity cost
pool?
b. How much cost, in total, would be allocated to the Business Development activity cost pool?
c. How much cost, in total, would be allocated to the Other activity cost pool?
10) Hagy Corporation has an activity-based costing system with three activity cost pools—
Processing, Setting Up, and Other. The company’s overhead costs, which consist of factory
utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools’
consumption of resources. Data concerning the company’s costs and activity-based costing
system appear below:
Factory utilities (total) $ 106,000
Indirect labor (total) $ 9,000
Distribution of Resource Consumption Across Activity Cost Pools
Processing Setting Up Other
Factory utilities 0.30 0.50 0.20
Indirect labor 0.20 0.30 0.50
Required:
Assign overhead costs to activity cost pools using activity-based costing.
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11) Groleau Corporation has an activity-based costing system with three activity cost pools—
Processing, Setting Up, and Other. The company’s overhead costs, which consist of factory
utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools’
consumption of resources. Costs in the Processing cost pool are assigned to products based on
machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the
number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the
two products and the company’s costs and activity-based costing system appear below:
Factory utilities (total) $ 31,800
Indirect labor (total) $ 12,200
Distribution of Resource Consumption Across Activity Cost Pools
Processing Setting Up Other
Factory utilities 0.50 0.20 0.30
Indirect labor 0.40 0.30 0.30
MHs Batches
Product S8 3,700 1,300
Product F1 7,300 800
Total 11,000 2,100
Product S8 Product F1
Sales (total) $ 72,700 $ 98,600
Direct materials (total) $ 21,900 $ 37,600
Direct labor (total) $ 30,900 $ 41,500
Required:
a. Assign overhead costs to activity cost pools using activity-based costing.
b. Calculate activity rates for each activity cost pool using activity-based costing. c. Determine
the amount of overhead cost that would be assigned to each product using activity-based costing.
d. Determine the product margins for each product using activity-based costing.
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12) Howell Corporation’s activity-based costing system has three activity cost pools—
Machining, Setting Up, and Other. The company’s overhead costs, which consist of equipment
depreciation and indirect labor, are allocated to the cost pools in proportion to the activity cost
pools’ consumption of resources.
Equipment depreciation (total) $ 27,300
Indirect labor (total) $ 7,510
Distribution of Resource Consumption Across Activity Cost Pools
Machining Setting Up Other
Equipment depreciation 0.50 0.20 0.30
Indirect labor 0.40 0.30 0.30
Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and
costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs
in the Other cost pool are not assigned to products.
MHs Batches
Product S4 10,700 1,000
Product C0 3,800 1,200
Total 14,500 2,200
Additional data concerning the company’s products appears below:
Product S4 Product C0
Sales (total) $ 90,300 $ 65,500
Direct materials (total) $ 31,500 $ 26,300
Direct labor (total) $ 37,400 $ 27,200
Required:
a. Assign overhead costs to activity cost pools using activity-based costing.
b. Calculate activity rates for each activity cost pool using activity-based costing. c. Determine
the amount of overhead cost that would be assigned to each product using activity-based costing.
d. Determine the product margins for each product using activity-based costing.
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13) Data concerning three of Kilmon Corporation’s activity cost pools appear below:
Activity Cost Pool Total Cost Total Activity
Assembling products $ 360,300 8,490 assembly hours
Designing products $ 1,387,535 7,667 product design hours
Setting up batches $ 31,200 740 batch set-ups
Required:
Compute the activity rates for each of the three cost pools. (Round your answers to 2 decimal
places.)
14) Sukhu Corporation’s activity-based costing system has three activity cost pools—
Fabricating, Setting Up, and Other. The company’s overhead costs have already been allocated to
these cost pools as follows:
Fabricating $ 11,300
Setting Up $ 34,900
Other $ 17,800
Costs in the Fabricating cost pool are assigned to products based on machine-hours (MHs) and
costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs
in the Other cost pool are not assigned to products. The following table shows the machine-hours
and number of batches associated with each of the company’s two products:
MHs Batches
Product M0 9,000 1,050
Product P9 4,000 1,450
Total 13,000 2,500
Required:
Calculate activity rates for each activity cost pool using activity-based costing. (Round your
answers to 2 decimal places.)
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15) Clenney Corporation uses a plantwide overhead rate based on direct labor-hours. It is
considering implementing an activity-based costing (ABC) system that allocates all of its
manufacturing overhead to the four activity cost pools shown below.
Activity Cost Pool Activity Measure Total Cost Total Activity
Machining Machine-hours $ 114,000 6,000 MHs
Machine setups Number of setups $ 100,000 200 setups
Product design Number of products $ 96,000 2 products
Order size Direct labor-hours $ 330,000 10,000 DLHs
Required:
a. Under the proposedABC system, what is the activity rate for the Machining activity cost
pool?
b. Under the proposedABC system, what is the activity rate for the Machine Setups activity cost
pool?
c. Under the proposedABC system, what is the activity rate for the Product Design activity cost
pool?
d. Under the proposedABC system, what is the activity rate for the Order size activity cost pool?
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16) EMD Corporation manufactures two products, Product S and Product W. Product W is of
fairly recent origin, having been developed as an attempt to enter a market closely related to that
of Product W. Product W is the more complex of the two products, requiring 2 hours of direct
labor time per unit to manufacture compared to 1 hour of direct labor time for Product S. Product
W is produced on an automated production line.
Overhead is currently assigned to the products on the basis of direct-labor-hours. The company
estimated it would incur $659,973 in manufacturing overhead costs and produce 14,600 units of
Product W and 58,400 units of Product S during the current year. Unit cost for materials and
direct labor are:
Product S Product W
Direct material $ 12 $ 29
Direct labor 7 20
Required:
a. Compute the predetermined overhead rate under the current method of allocation and
determine the unit product cost of each product for the current year. b. The company’s overhead
costs can be attributed to four major activities. These activities and the amount of overhead cost
attributable to each for the current year are given below:
Activity Cost Pool Total Cost Total Activity
Product S Product W Total
Machine setups required $ 255,000 900 1,650 2,550
Purchase orders issued 54,677 565 184 749
Machine-hours required 163,620 7,410 10,770 18,180
Maintenance requests issued 186,676 721 861 1,582
$ 659,973
Using the data above and an activity-based costing approach, determine the unit product cost of
each product for the current year.
17) Boudoin Corporation manufactures two products: Product T72T and Product L34S. It is
considering implementing an activity-based costing (ABC) system that allocates all of its
manufacturing overhead to four cost pools. The following additional information is available for
the company as a whole and for Products T72T and L34S.
Activity Cost Pool Activity Measure Total Cost Total Activity
Machining Machine-hours $ 345,000 15,000 MHs
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Machine setups Number of setups $ 180,000 450 setups
Product design Number of products $ 94,000 2 products
Order size Direct labor-hours $ 280,000 10,000 DLHs
Activity Measure Product T72T Product L34S
Machine-hours 8,000 7,000
Number of setups 320 130
Number of products 1 1
Direct labor-hours 4,000 6,000
Required:
a. Using the ABC system, how much total manufacturing overhead cost would be assigned to
Product T72T?
b. Using theABC system, what percentage of the total overhead cost is assigned to Product
L34S?
18) Ciulla Corporation manufactures two products: Product J12N and Product H63J. The
company is considering implementing an activity-based costing (ABC) system that allocates all
of its manufacturing overhead to four cost pools. The following additional information is
available for the company as a whole and for Products J12N and H63J.
Activity Cost Pool Activity Measure Total Cost Total Activity
Machining Machine-hours $ 315,000 15,000 MHs
Machine setups Number of setups $ 250,000 500 setups
Product design Number of products $ 42,000 2 products
Order size Direct labor-hours $ 280,000 10,000 DLHs
Activity Measure Product J12N Product H63J
Machine-hours 8,000 7,000
Number of setups 260 240
Number of products 1 1
Direct labor-hours 3,000 7,000
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Required:
a. Using theactivity-based costing system, how much total manufacturing overhead cost would
be assigned to Product H63J?
b. Using theactivity-based costing system, what percentage of the total overhead cost is
assigned to Product J12N?
19) Daston Company manufactures two products, Product F and Product G. The company
expects to produce and sell 1,470 units of Product F and 2,560 units of Product G during the
current year. Data relating to the company’s three activity cost pools are given below for the
current year:
Activity Cost Pools Total Cost Total Activity
Product F Product G Total
Machine setups $ 33,440 166 setups 186 setups 352
setups
Purchase orders $ 191,250 580 orders 1,970 orders 2,550
orders
Order size $ 132,430 3,220 hours 3,750 hours 6,970 hours
Required:
Using the activity-based costing approach, determine the overhead cost per unit for each
product. (Round your answers to 2 decimal places.)
20) Musich Corporation has an activity-based costing system with three activity cost pools—
Machining, Setting Up, and Other. The company’s overhead costs, which consist of equipment
depreciation and indirect labor, have been allocated to the cost pools already and are provided in
the table below.
Activity Cost Pools Total
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Machining Setting Up Other
Equipment depreciation $ 7,600 $ 44,200 $ 22,000 $ 73,800
Indirect labor 1,800 2,000 3,200 7,000
Total $ 9,400 $ 46,200 $ 25,200 $ 80,800
Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and
costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs
in the Other cost pool are not assigned to products. Data concerning the two products and the
company’s costs appear below:
MHs Batches
Product Z3 5,100 300
Product T1 5,300 900
Total 10,400 1,200
Product Z3 Product T1
Sales (total) $ 212,800 $ 246,500
Direct materials (total) $ 79,500 $ 95,800
Direct labor (total) $ 108,200 $ 100,700
Required:
a. Calculate activity rates for each activity cost pool using activity-based costing.
b. Determine the amount of overhead cost that would be assigned to each product using activity-
based costing. c. Determine the product margins for each product using activity-based costing.
21) Greife Corporation’s activity-based costing system has three activity cost pools—
Machining, Setting Up, and Other. The company’s overhead costs have already been allocated to
these cost pools as follows:
Machining $ 57,408
Setting Up $ 103,554
Other $ 21,700
Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and
costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs
in the Other cost pool are not assigned to products. The following table shows the machine-hours
and number of batches associated with each of the company’s two products:
MHs Batches
Product K0 2,930 1,200
Product W9 8,110 780
Total 11,040 1,980
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Additional data concerning the company’s products appears below:
Product K0 Product W9
Sales (total) $ 265,000 $ 227,000
Direct materials (total) $ 85,800 $ 83,500
Direct labor (total) $ 96,400 $ 59,100
Required:
a. Calculate activity rates for each activity cost pool using activity-based costing. (Round your
answers to 2 decimal places.)
b. Determine the amount of overhead cost that would be assigned to each product using activity-
based costing. (Round intermediate calculations to 2 decimal places.) c. Determine the
product margins for each product using activity-based costing. (Round intermediate
calculations to 2 decimal places.)
22) Zwahlen Corporation has an activity-based costing system with three activity cost pools—
Processing, Setting Up, and Other. Costs in the Processing cost pool are assigned to products
based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products
based on the number of batches. Costs in the Other cost pool are not assigned to products. Data
concerning the two products and the company’s costs and activity-based costing system appear
below:
Activity Cost Pools
Processing $ 56,400
Setting Up $ 13,600
Other $ 28,800
MHs Batches
Product D7 8,300 350
Product H0 12,300 950
Total 20,600 1,300
Product D7 Product H0
Sales (total) $ 216,800 $ 302,600
Direct materials (total) $ 72,900 $ 145,500
Direct labor (total) $ 106,430 $ 96,500
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Required:
a. Calculate activity rates for each activity cost pool using activity-based costing. (Round your
answers to 2 decimal places.)
b. Determine the amount of overhead cost that would be assigned to each product using activity-
based costing. (Round intermediate calculations to 2 decimal places.) c. Determine the
product margins for each product using activity-based costing. (Round intermediate
calculations to 2 decimal places.)
23) Desjarlais Corporation uses the following activity rates from its activity-based costing to
assign overhead costs to products. (Do not round intermediate calculations. Round your final
answers to 2 decimal places.)
Activity Cost Pools Activity Rate
Setting up batches $ 160.80 per batch
Assembling products $ 10.40 per assembly hour
Processing customer orders $ 52.72 per customer order
Data concerning two products appear below:
Product S96U Product Q06F
Number of batches 44 49
Number of assembly hours 161 893
Number of customer orders 21 47
Required:
a. How much overhead cost would be assigned to Product S96U using the company’s activity-
based costing system?
b. How much overhead cost would be assigned to Product Q06F using the company’s activity-
based costing system?
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24) Mcnamee Corporation’s activity-based costing system has three activity cost pools—
Fabricating, Setting Up, and Other. Costs in the Fabricating cost pool are assigned to products
based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products
based on the number of batches. Costs in the Other cost pool are not assigned to products. The
activity rate for Fabricating is $0.18 per machine-hour; the activity rate for Setting Up is $3.34
per batch. The following table shows the machine-hours and number of batches associated with
each of the company’s two products:
MHs Batches
Product O0 2,600 240
Product O1 17,000 1,760
Total 19,600 2,000
Required:
Determine the amount of overhead cost that would be assigned to each product using activity-
based costing. (Do not round intermediate calculations. Round your final answers to the
nearest whole dollar amount.)
25) Orick Enterprises makes a variety of products that it sells to other businesses. The
company’s activity-based costing system has four activity cost pools for assigning costs to
products and customers. Details concerning thatactivity-based costing system are listed below:
Activity Cost Pool Activity Measure Activity Rate
Supporting assembly Direct labor-hours (DLHs) $ 6.25 per DLH
Processing batches Number of batches $ 181.40 per batch
Processing orders Number of orders $ 54.00 per order
Serving customers Number of customers $ 2,574.00 per customer
The cost of serving customers, $2,574.00 per customer, is the cost of serving a customer for one
year. Peiffer Corporation buys only one of the company’s products. The details of last year’s
purchases of this product are listed below:
Number of units purchased 900 units
Number of batches 9 batches
Number of orders 4 orders
Direct labor-hour requirement 0.15 DLHs per unit
Selling price $ 23.95 per unit
Direct materials cost $ 7.00 per unit
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Direct labor cost $ 2.35 per unit
Required:
a. According to the activity-based costing system, what is the cost of the “Supporting
assembly” activity for Peiffer Corporation for the year?
b. According to theactivity-based costing system, what is the cost of the “Processing batches”
activity for Peiffer Corporation for the year?
c. According to theactivity-based costing system, what is the cost of the “Processing orders”
activity for Peiffer Corporation for the year?
d. According to theactivity-based costing system, what is the cost of the “Servicing customers”
activity for Peiffer Corporation for the year?
e. What is the customer margin on sales to Peiffer Corporation for the year?
26) Mcinture Enterprises makes a variety of products that it sells to other businesses. The
company’s activity-based costing system has four activity cost pools for assigning costs to
products and customers. Details concerning thatactivity-based costing system are listed below:
Activity Cost Pool Activity Measure Activity Rate
Supporting assembly Direct labor-hours (DLHs) $ 4.20 per DLH
Processing batches Number of batches $ 123.35 per batch
Processing orders Number of orders $ 71.00 per order
Serving customers Number of customers $ 2,334.00 per customer
The cost of serving customers, $2,334.00 per customer, is the cost of serving a customer for one
year.
Schwerin Corporation buys only one of the company’s products which Mcinture Enterprises
sells for $28.40 per unit. Last year Schwerin Corporation ordered a total of 1,100 units of this
product in 2 orders. To fill the orders, 6 batches were required. The direct materials cost is $8.40
per unit and the direct labor cost is $1.80 per unit. Each unit requires 0.10 direct labor-hours.
Required:
What is the customer margin on sales to Schwerin Corporation for the year?
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27) Orozco Enterprises makes a variety of products that it sells to other businesses. The
company’s activity-based costing system has four activity cost pools for assigning costs to
products and customers. Details concerning thatactivity-based costing system are listed below:
Activity Cost Pool Activity Measure Activity Rate
Supporting assembly Direct labor-hours (DLHs) $ 5.20 per DLH
Processing batches Number of batches $ 107.55 per batch
Processing orders Number of orders $ 88.75 per order
Serving customers Number of customers $ 1,793.00 per customer
The cost of serving customers, $1,793.00 per customer, is the cost of serving a customer for one
year. Ellyson Corporation buys only one of the company’s products. The details of last year’s
purchases of this product are listed below:
Number of units purchased 900 units
Number of batches 8 batches
Number of orders 2 orders
Direct labor-hour requirement 0.25 DLHs per unit
Selling price $ 16.30 per unit
Direct materials cost $ 6.60 per unit
Direct labor cost $ 5.00 per unit
Required:
What is the customer margin on sales to Ellyson Corporation for the year?
28) Spigelmyer Enterprises makes a variety of products that it sells to other businesses. The
company’s activity-based costing system has four activity cost pools for assigning costs to
products and customers. Details concerning thatactivity-based costing system are listed below:
Activity Cost Pool Activity Measure Activity Rate
Supporting assembly Direct labor-hours (DLHs) $ 5.50 per DLH
Processing batches Number of batches $ 176.30 per batch
Processing orders Number of orders $ 85.20 per order
Serving customers Number of customers $ 1,039.00 per customer
The cost of serving customers, $1,039.00 per customer, is the cost of serving a customer for one
year.
Oelschlaeger Corporation buys only one of the company’s products which Spigelmyer
Enterprises sells for $18.05 per unit. Last year Oelschlaeger Corporation ordered a total of 1,100
units of this product in 2 orders. To fill the orders, 8 batches were required. The direct materials
cost is $6.20 per unit and the direct labor cost is $5.70 per unit. Each unit requires 0.30 direct
labor-hours.
Required:
a. According to theactivity-based costing system, what is the cost of the “Supporting assembly”
activity for Oelschlaeger Corporation for the year?
b. According to theactivity-based costing system, what is the cost of the “Processing batches”
activity for Oelschlaeger Corporation for the year?
c. According to theactivity-based costing system, what is the cost of the “Processing orders”
activity for Oelschlaeger Corporation for the year?
d. According to theactivity-based costing system, what is the cost of the “Servicing customers”
activity for Oelschlaeger Corporation for the year?
e. What is the customer margin on sales to Oelschlaeger Corporation for the year?
Answer Key
Test name: chapter 7