Exam 5: Activity-Based Costing and Customer Profitability Analysis

Zeta Company is preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of manufacturing overhead that should be assigned to each of the two product lines from the information given below. Wall Mirrors Specialty Windows Total units produced 25 25 Total number of material moves 5 15 Direct labor hours per unit 200 200 Budgeted material-handling costs are $50,000. The material-handling cost per wall mirror under ABC is:

A volume-based rate is an appropriate overhead application base when:

If the usage of project activities is not proportional to the number of units produced, then some managers will be overcharged and others undercharged under the:

Scott Cameras produces digital cameras and have decided to switch from a volume-based system to an activity-based system. Scott produced 100,000 digital cameras in the most recent quarter and has determined that their total activity costs were: $3,000,000 of materials cost, $500,000 of labor costs, $50,000 of inspection costs, and $500,000 of packaging costs. It takes 30 minutes of labor to produce each camera, inspections are done for 20% of all cameras produced, and cameras are packaged individually. Required: What are the driver rates for each activity?

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers:Using activity-based costing, applied quality control factory overhead for the 1,000 laser printers order is:

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers:Using activity-based costing, total overhead per unit of Great P model is (rounded to the nearest cent):

Shaver Co. manufactures a variety of electric razors for men and women. The company's plant is partially automated. Listed below is cost driver information used in the product-costing system:Using ABC, how much product-level overhead is assigned to the current order for Women's Razors?

Which of the following would be the most appropriate cost driver to allocate factory electricity costs to products?

Which of the following is an example of a high-value-added activity?

If Activity X had a budgeted cost of $125,000 and a budgeted activity consumption of 10,000 engineering hours, what would the activity consumption rate be?

Volume-Based Costing Versus ABC: Gorden Company produces a variety of electronic products.One of its plants produces two laser printers, Speedy and Deluxe.At the beginning of 2019, the following data were prepared for this plant: Deluxe Speedy Quantity 50,000 400,000 Selling price \ 475.00 \ 300.00 Unit prime cost 180.00 110.00 Unit overhead cost 20.00 153.60 The unit overhead cost is calculated using the predetermined overhead application rate based on direct labor-hours. Upon examining the data, the marketing manager was particularly impressed with the per-unit profitability of the Deluxe printer and suggested that more emphasis be placed on producing and selling this product.The plant supervisor objected to this strategy, arguing that the Deluxe model required a very delicate manufacturing process.The supervisor believed that the cost of the Deluxe printer was likely to be much higher than reported. The controller suggests an activity-based costing system and provides the following budget data pertaining to the period: * Cost per unit of cost driver Required: 1.Using the projected data based on the firm's current costing system, calculate gross profit per unit and gross profit percentage for each product.Round calculations to 2 decimal places. 2.Using the suggested multiple cost drivers' overhead rates, calculate the overhead cost per unit for each product and determine gross profit per unit and gross profit percentage for each product. 3.Based on your results, evaluate the suggestion of the marketing manager to emphasize the Deluxe model. 4.How does ABC contribute to Gorden's competitive advantage?

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.Using activity-based costing, applied quality control factory overhead for the High F model per unit is (rounded to the nearest cent):

An adaptation of ABC costing that simplifies ABC by assigning resource costs directly to cost objects is called:

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.Using activity-based costing, applied machinery overhead for the Great P model per unit is (rounded to the nearest cent):

When gathering activity data, which of the following would not be a question that ABC project team members typically ask employees or managers?

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.Using activity-based costing, applied machinery overhead for the High F model per unit is (rounded to the nearest cent):

Which of the following is not normally associated with activity-based costing?

Which of the following is a batch-level cost driver?

The controller for Alabama Cooking Oil Co.established the following overhead cost pools and cost drivers: An order of 800 barrels of cooking oil used: \# of setups 14 \# of barrels 800 \# of inspections 22 \# of machine hours 1,100 Required: (1) What is the overhead rate per machine hour if the number of machine hours is used as a single cost driver under traditional costing system? (Round your intermediate calculation to the nearest cent and final answer to the nearest whole dollar.) (2) Using volume-based costing, how much overhead is assigned to the order based on machine hours as a single cost driver? (3) Using ABC costing, how much total overhead is assigned to the order?

In an activity-based costing system, overhead costs are divided into separate: