Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
34. Spendlove Corporation has provided the following data from its activity-based costing
system:
The company makes 430 units of product S78N a year, requiring a total of 1,120 machine-
hours, 40 orders, and 30 inspection-hours per year. The product’s direct materials cost is
$49.81 per unit and its direct labor cost is $12.34 per unit. The product sells for $129.90 per
unit.
According to the activity-based costing system, the product margin for product S78N is:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
35. Maccarone Corporation has provided the following data from its activity-based costing
system:
Data concerning one of the company’s products, Product A43V, appear below:
According to the activity-based costing system, the product margin for product A43V is:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
36. Reach Consulting Corporation has its headquarters in Chicago and operates from three
branch offices in Portland, Dallas, and Miami. Two of the company’s activity cost pools are
General Service and Research Service. These costs are allocated to the three branch offices
using an activity-based costing system. Information for next year follows:
Estimated branch data for next year is as follows:
How much of the headquarters cost allocation should Dallas expect to receive next year?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
37. Drewniak Corporation has provided the following data from its activity-based costing
system:
The company makes 430 units of product O37W a year, requiring a total of 690 machine-
hours, 40 orders, and 10 inspection-hours per year. The product’s direct materials cost is
$35.72 per unit and its direct labor cost is $29.46 per unit.
According to the activity-based costing system, the average cost of product O37W is closest
to:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
38. Petitte Corporation has provided the following data from its activity-based costing system:
Data concerning the company’s product K54A appear below:
According to the activity-based costing system, the average cost of product K54A is closest
to:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
39. Matt Company uses activity-based costing. The company has two products: A and B. The
annual production and sales of Product A is 8,000 units and of Product B is 6,000 units. There
are three activity cost pools, with total cost and total activity as follows:
The activity-based costing cost per unit of Product A is closest to:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
40. Gaucher Corporation has provided the following data from its activity-based costing
accounting system:
The activity rate for the “designing products” activity cost pool is closest to:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
41. Data concerning three of the activity cost pools of Burlingame LLC, a legal firm, have
been provided below:
The activity rate for the “meeting with clients” activity cost pool is closest to:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
42. Paul Company has two products: A and B. The company uses activity-based costing. The
total cost and activity for each of the company’s three activity cost pools are as follows:
The activity rate under the activity-based costing system for Activity 3 is closest to:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
43. Wecker Corporation uses the following activity rates from its activity-based costing to
assign overhead costs to products:
Data concerning two products appear below:
How much overhead cost would be assigned to Product V09X using the activity-based costing
system?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
44. Ekmark Corporation uses the following activity rates from its activity-based costing to
assign overhead costs to products:
Data for one of the company’s products follow:
How much overhead cost would be assigned to Product P59G using the activity-based costing
system?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
45. Activity rates from Quattrone Corporation’s activity-based costing system are listed
below. The company uses the activity rates to assign overhead costs to products:
Last year, Product F76D involved 2 customer orders, 434 assembly hours, and 20 batches.
How much overhead cost would be assigned to Product F76D using the activity-based costing
system?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
Lehner Corporation has provided the following data from its activity-based costing
accounting system:
Distribution of Resource Consumption across Activity Cost Pools:
Activity Cost Pools
The “Other” activity cost pool consists of the costs of idle capacity and organization-
sustaining costs that are not assigned to products.
46. How much indirect factory wages and factory equipment depreciation cost would be
assigned to the Customer Orders activity cost pool?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
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47. How much indirect factory wages and factory equipment depreciation cost would NOT be
assigned to products using the activity-based costing system?
Loffredo Corporation has provided the following data from its activity-based costing
accounting system:
Distribution of Resource Consumption across Activity Cost Pools:
Activity Cost Pools
The “Other” activity cost pool consists of the costs of idle capacity and organization-
sustaining costs that are not assigned to products.
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
48. How much supervisory wages and factory supplies cost would be assigned to the Batch
Processing activity cost pool?
49. How much supervisory wages and factory supplies cost would NOT be assigned to
products using the activity-based costing system?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
The following data have been provided by Kelch Corporation from its activity-based costing
accounting system:
Distribution of Resource Consumption across Activity Cost Pools:
Activity Cost Pools
The “Other” activity cost pool consists of the costs of idle capacity and organization-
sustaining costs that are not assigned to products.
50. How much factory supervision and indirect factory labor cost would be assigned to the
Batch Set-Up activity cost pool?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
51. How much factory supervision and indirect factory labor cost would NOT be assigned to
products using the activity-based costing system?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
7-40
Fogle Florist specializes in large floral bouquets for hotels and other commercial spaces. The
company has provided the following data concerning its annual overhead costs and its activity
based costing system:
The “Other” activity cost pool consists of the costs of idle capacity and organization-
sustaining costs.
The amount of activity for the year is as follows: