Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
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Ballweg Corporation has an activity-based costing system with three activity cost pools-
Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead
accounts, equipment depreciation and supervisory expense, are allocated to the three activity
cost pools based on resource consumption. Data used in the first stage allocations follow:
Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs
are assigned to products using the number of orders. The costs in the Other activity cost pool
are not assigned to products. Activity data for the company’s two products follow:
Finally, the costs of Machining and Order Filling are combined with the following sales and
direct cost data to determine product margins.
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
98. How much overhead cost is allocated to the Order Filling activity cost pool under activity-
based costing?
99. The activity rate for the Order Filling activity cost pool under activity-based costing is
closest to:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
100. What is the overhead cost assigned to Product T2 under activity-based costing?
101. What is the product margin for Product T2 under activity-based costing?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
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Laningham Corporation uses an activity based costing system to assign overhead costs to
products. In the first stage, two overhead costs-equipment depreciation and supervisory
expense-are allocated to three activity cost pools-Machining, Order Filling, and Other-based
on resource consumption. Data to perform these allocations appear below:
In the second stage, Machining costs are assigned to products using machine-hours (MHs)
and Order Filling costs are assigned to products using the number of orders. The costs in the
Other activity cost pool are not assigned to products. Activity data for the company’s two
products follow:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
102. How much overhead cost is allocated to the Machining activity cost pool under activity-
based costing in the first stage of allocation?
103. The activity rate for the Machining activity cost pool under activity-based costing is
closest to:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
104. What is the overhead cost assigned to Product H4 under activity-based costing?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
7-87
Capizzi Corporation has an activity-based costing system with three activity cost pools-
Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead
accounts, equipment depreciation and supervisory expense, are allocated to three activity cost
pools based on resource consumption. Data used in the first stage allocations follow:
Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs
are assigned to products using the number of orders. The costs in the Other activity cost pool
are not assigned to products. Activity data for the company’s two products follow:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
105. How much overhead cost is allocated to the Order Filling activity cost pool under
activity-based costing?
106. The activity rate for the Order Filling activity cost pool under activity-based costing is
closest to:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
107. What is the overhead cost assigned to Product V2 under activity-based costing?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
Goold Corporation uses activity-based costing to compute product margins. Overhead costs
have already been allocated to the company’s three activity cost pools-Machining, Order
Filling, and Other. The costs in those activity cost pools appear below:
Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs
are assigned to products using the number of orders. The costs in the Other activity cost pool
are not assigned to products. Activity data appear below:
Finally, sales and direct cost data are combined with Machining and Order Filling costs to
determine product margins.
108. The activity rate for Machining under activity-based costing is closest to:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
109. What is the overhead cost assigned to Product R9 under activity-based costing?
110. What is the product margin for Product R9 under activity-based costing?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
Ormond Corporation uses activity-based costing to assign overhead costs to products.
Overhead costs have already been allocated to the company’s three activity cost pools as
follows: Machining, $6,800; Order Filling, $10,700; and Other, $4,500. Machining costs are
assigned to products using machine-hours (MHs) and Order Filling costs are assigned to
products using the number of orders. The costs in the Other activity cost pool are not assigned
to products. Activity data appear below:
111. The activity rate for the Machining activity cost pool under activity-based costing is
closest to:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
112. What is the overhead cost assigned to Product B6 under activity-based costing?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
Pedroni Corporation uses activity-based costing to compute product margins. Overhead costs
have already been allocated to the company’s three activity cost pools-Machining, Order
Filling, and Other. The costs in those activity cost pools appear below:
Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs
are assigned to products using the number of orders. The costs in the Other activity cost pool
are not assigned to products. Activity data appear below:
Finally, sales and direct cost data are combined with Machining and Order Filling costs to
determine product margins.
113. The activity rate for the Order Filling activity cost pool under activity-based costing is
closest to:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
114. What is the overhead cost assigned to Product F2 under activity-based costing?
115. What is the product margin for Product F2 under activity-based costing?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
Figurski Corporation uses activity-based costing to assign overhead costs to products.
Overhead costs have already been allocated to the company’s three activity cost pools as
follows: Machining, $38,500; Order Filling, $23,000; and Other, $15,500. Machining costs
are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to
products using the number of orders. The costs in the Other activity cost pool are not assigned
to products. Activity data appear below:
116. The activity rate for the Order Filling activity cost pool under activity-based costing is
closest to:
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
117. What is the overhead cost assigned to Product I6 under activity-based costing?
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
Essay Questions
118. Tresselt Corporation has provided the following data from its activity-based costing
accounting system:
Distribution of Resource Consumption across 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.
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. Show your work!
b. Determine the total amount of indirect factory wages and factory equipment depreciation
costs that would NOT be assigned to products. Show your work!
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
119. Yoke Corporation has provided the following data from its activity-based costing
accounting system:
Distribution of Resource Consumption across 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.
Required:
a. Determine the total amount of supervisory wages and factory utilities costs that would be
allocated to the unit Processing activity cost pool. Show your work!
b. Determine the total amount of supervisory wages and factory utilities costs that would NOT
be assigned to products. Show your work!
Chapter 07 – Activity-Based Costing: A Tool to Aid Decision Making
120. The following data have been provided by Mesa Corporation from its activity-based
costing accounting system:
Distribution of Resource Consumption across 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.
Required:
a. Determine the total amount of supervisory wages and factory utilities costs that would be
allocated to the Machining activity cost pool. Show your work!
b. Determine the total amount of supervisory wages and factory utilities costs that would NOT
be assigned to products. Show your work!