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In: Accounting

1. Salvatore LLC provides a wide variety of legal services and uses an activity?based costing system....

1. Salvatore LLC provides a wide variety of legal services and uses an activity?based costing system. Data from its activity?based costing system for all services follows:

Activity cost pool	Total cost	Total activity
Research	$173,200	6,200	Hours of paralegal time
Client meetings	$345,300	3,900	Number of meeting hours
Court filing fees	$303,500	1,600	Number of cases
Document preparation	$145,600	4,900	Number of documents

The cost pool activity rate for client meetings is

A. $7.08 per meeting hour.

B. $88.54 per meeting hour.

C. $58.29 per meeting hour.

D. $27.94 per meeting hour.

2. Vintage Fun reproduces old?fashioned style roller skates and skateboards. The annual production and sales of roller skates is 1,000 units, while 1,760 skateboards are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Roller skates require 1.5 direct labor hours per unit, while skateboards require 1.25 direct labor hours per unit. The total estimated overhead for the period is $113,800. The company is looking at the possibility of changing to an activity?based costing system for its products. If the company used an activity?based costing system, it would have the following three activity cost pools:

		Expected activity
Activity cost pool	Estimated overhead cost	Roller skates	Stakeboards	Total
Setup costs	$6,550	345	310	655
Engineering costs	$16,200	430	670	1,100
Maintenance costs	$91,050	2,375	2,158	4,533

The overhead cost per skateboard using the traditional costing system would be closest to (Round all answers to two decimal places.)

A. $19.67

B. $51.68

C. $63.37

D. $111.53

3. Gwynnie Pie Company makes dessert pies for national fast food chains. Gwynnie Pie Company is considering using ABC costing and has the following activity cost pools and information available:

Activities	Estimated Overhead Costs	Estimated Activity
Material handling measured by batches	$250,000	2,500 batches
Mixing measured by batches	$112,000	2,500 batches
Packaging measured by units	$75,000	2,500,000 units
Maintenance measured by # of setups	$15,000	260 setups

Gwynnie Pie Company currently uses a plantwide overhead rate based on total estimated machine hours of 100,000 hours.

Based on their estimates for ABC costing, what would the allocated cost for all overhead costs for Job 607 be based on the following information about the job:

# of units in the job = 5,000

# of units in each batch = 1,000

# of setups required to complete the job = 1

# of machine hours = 220

A. $352.50

B. $994.40

C. $800.00

D. $931.69

4. Which of the following cost of quality categories represent the cost incurred to detect poor quality goods or services prior to consumer delivery in the marketplace?

A. Value?added activity

B. Just?in?time production

C. Appraisal costs

D. External failure costs

Expert Solution

ekkarill92 answered 1 year ago

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