Question
In: Accounting
2. A Plus Company uses activity-based costing to determine the costs of its three products: A,...
2.
A Plus Company uses activity-based costing to determine the
costs of its three products: A, B, and C. The budgeted cost and
activity for each of the company's three activity cost pools are
shown in the following table:
| Budgeted Activity | |||||||||
| Activity Cost Pool | Budgeted Cost | Product A | Product B | Product C | |||||
| Activity 1 | $ | 70,000 | 6,000 | 9,000 | 20,000 | ||||
| Activity 2 | $ | 45,000 | 7,000 | 15,000 | 8,000 | ||||
| Activity 3 | $ | 82,000 | 2,500 | 1,000 | 1,625 | ||||
Which of the following statements is true regarding this company's
activity rates?
Multiple Choice
-
The activity rate under the activity-based costing system for Activity 2 is $2.81.
-
The activity rate under the activity-based costing system for Activity 2 is $16.00.
-
The activity rate under the activity-based costing system for Activity 2 is $19.50.
-
The activity rate under the activity-based costing system for Activity 2 is $1.50.
-
The activity rate under the activity-based costing system for Activity 2 is $2.00.
Solutions
Expert Solution
Correct answer-------The activity rate under the activity-based costing system for Activity 2 is $1.50.
Working
| Calculation of Activity rates | |||||
| Activity Cost Pool | Activity driver | Overhead Cost | Expected Activity (B) | Activity rate (A/B) | |
| Activity 1 | Number of Activity | $ 70,000.00 | 35,000 | $ 2.00 | Per Activity |
| Activity 2 | Number of Activity | $ 45,000.00 | 30000 | $ 1.50 | Per Activity |
| Activity 3 | Number of Activity | $ 82,000.00 | 5125 | $ 16.00 | Per Activity |
As it can be seen $16 per activity is rate for Activity 3 not 2 and $ 2 is rate for activity 1.
ekkarill92 answered 9 months agoRelated Solutions
A company uses activity-based costing to determine the costs of its three products: A, B, and...
A company uses activity-based costing to determine the costs of
its three products: A, B, and C. The budgeted cost and activity for
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following table:
Budgeted Activity
Activity Cost Pool
Budgeted Cost
Product A
Product B
Product C
Activity 1
$
85,000
7,500
10,500
21,500
Activity 2
$
60,000
8,500
16,500
9,500
Activity 3
$
112,000
4,000
2,500
3,125
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A company uses activity-based costing to determine the costs of its three products: A, B, and...
A company uses activity-based costing to determine the costs of
its three products: A, B, and C. The budgeted cost and activity for
each of the company's three activity cost pools are shown in the
following table:
A company uses activity-based costing to determine the costs of
its three products: A, B, and C. The budgeted cost and activity for
each of the company's three activity cost pools are shown in the
following table:
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Budgeted...
A company uses activity-based costing to determine the costs of its three products: A, B, and...
A company uses activity-based costing to determine the costs of
its three products: A, B, and C. The budgeted cost and activity for
each of the company's three activity cost pools are shown in the
following table:
Budgeted Activity
Activity Cost Pool
Budgeted Cost
Product A
Product B
Product C
Activity 1
$
75,000
6,500
9,500
20,500
Activity 2
$
50,000
7,500
15,500
8,500
Activity 3
$
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3,000
1,500
2,125
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1.) A company uses activity-based costing to determine the costs of its three products: A, B,...
1.) A company uses activity-based costing to determine the costs
of its three products: A, B, and C. The budgeted cost and activity
for each of the company's three activity cost pools are shown in
the following table:
Budgeted Activity
Activity Cost Pool
Budgeted Cost
Product A
Product B
Product C
Activity 1
$
81,000
7,100
10,100
21,100
Activity 2
$
56,000
8,100
16,100
9,100
Activity 3
$
104,000
3,600
2,100
2,725
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costs of its three products: A, B, and C. The budgeted cost and
activity for each of the company's three activity cost pools are
shown in the following table:
Budgeted Activity
Activity Cost Pool
Budgeted Cost
Product A
Product B
Product C
Activity 1
$
89,000
7,900
10,900
21,900
Activity 2
$
64,000
8,900
16,900
9,900
Activity 3
$
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4,400
2,900
3,525
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4. Nationals Inc. uses activity-based costing to determine the
costs of its three products: A, B, and C. The budgeted cost and
activity for each of the company's three activity cost pools are
shown below. (Check: Activity 1 activity rate should be a number
between $7 and $10). (3 points)
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Activity Cost Pool
Budgeted Cost
Product A
Product B
Product C
Activity 1
$140,000
7,500
4,000
6,000
Activity 2
$54,000
2,500
2,000
1,500
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15,000
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identified three overhead activities and related drivers. Budgeted
information for the year is as follows:
Activity
Cost
Driver
Amount of Driver
Materials handling
$101,200
Number of moves
4,000
Engineering
142,400
Number of change orders
8,000
Other overhead
358,800
Direct labor hours
52,000
Heitger worked on four jobs in July. Data are as follows:
Job 13-43
Job 13-44
Job...
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activity-based costing to apply overhead to jobs. Heitger
identified three overhead activities and related drivers. Budgeted
information for the year is as follows:
Activity
Cost
Driver
Amount of Driver
Materials handling
$54,250
Number of moves
2,500
Engineering
120,700
Number of change orders
8,500
Other overhead
148,500
Direct labor hours
45,000
Heitger worked on four jobs in July. Data are as follows:
Job 13-43
Job 13-44
Job...
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overhead to jobs. Heitger identified three overhead activities and
related drivers. Budgeted information for the year is as follows:
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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:
Overhead costs:
Equipment depreciation
$
47,000
Supervisory expense
$
6,000
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment depreciation
0.60
0.10
0.30
Supervisory expense
0.60
0.20
0.20...
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