Question
In: Accounting
4. Nationals Inc. uses activity-based costing to determine the costs of its three products: A, B,...
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)
|
Budgeted Activity |
||||
|
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 |
|
Activity 3 |
$38,000 |
15,000 |
25,000 |
30,000 |
Compute the company's activity rates under activity-based costing
for each of the three activities.
5. Yasiel, Designs, Inc. designs custom storage solutions to
businesses. The following data is from the company’s most reporting
period:
|
Design department |
||
|
Client consultation |
500 contact hours |
$100,000 |
|
Drawing |
1,000 design hours |
$70,000 |
|
Models |
20,000 square feet |
$25,000 |
|
Project Management |
||
|
Supervision |
250 days |
$43,750 |
|
Billings |
150 jobs |
$55,000 |
a. Use ABC to compute overhead rates for each activity. Hint: You
should have five different ABC overhead rates based on budgeted
costs and overhead drivers above. (1 point)
b. Allocate costs to a 3,000 square foot job that requires 70 contact hours, 20 design hours, and 14 days to complete. Hint: Use the ABC overhead rates that you calculated in part a to allocate the overhead for each activity to this job based on the requirements of this one job. Check: Total overhead for this one job is a number between $20,000 and $23,000.
Solutions
Expert Solution
4. The company's activity rates under activity-based costing :
Activity A = $ 8.00
Activity B = $ 9.00
Activity C= $ 0.54
Note :
| Budgeted Activity | ||||||
| Activity Cost Pool | Budgeted Cost | Product A | Product B | Product C | Total Budgeted Activity ( Product A+ B+ C) | Activity Rate ( Budgeted Cost /Total Budgeted Activity ) |
| Activity 1 | 140000 | 7,500 | 4,000 | 6,000 | 17500 | 8.00 |
| Activity 2 | 54000 | 2,500 | 2,000 | 1,500 | 6000 | 9.00 |
| Activity 3 | 38000 | 15,000 | 25,000 | 30,000 | 70000 | 0.54 |
5.
The correct answer is :
| Activity | Activity Rate |
| Client consultation | 200.00 |
| Drawing | 70.00 |
| Models | 1.25 |
| Supervision | 175.00 |
| Billings | 366.67 |
Note :
| Design department | Activity Rate ( Budgeted Cost / Budgeted Activity ) | ||
| Activity | Budgeted Activity | Budgeted Cost | |
| Client consultation | 500 contact hours | $100,000 | 200.00 |
| Drawing | 1,000 design hours | $70,000 | 70.00 |
| Models | 20,000 square feet | $25,000 | 1.25 |
| Project Management | |||
| Activity | Budgeted Activity | Budgeted Cost | |
| Supervision | 250 days | $43,750 | 175.00 |
| Billings | 150 jobs | $55,000 | 366.67 |
b.
The correct answer is $ 21,966.67
Note :
| Activity | Activity Rate | Activity | Costs Allocated ( Activity Rate * Activity) |
| Client consultation | 200.00 | 70 contact hours | 14,000.00 |
| Drawing | 70.00 | 20 design hours | 1,400.00 |
| Models | 1.25 | 3,000 square feet | 3,750.00 |
| Supervision | 175.00 | 14 days | 2,450.00 |
| Billings | 366.67 | 1 job | 366.67 |
| 21,966.67 |
ekkarill92 answered 11 months agoRelated Solutions
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