ACCT 207 ASP Chapter 5

Activity drivers can be classified as:

either unit based or non-unit based.

Activity attributes are:

financial and nonfinancial information items that describe individual activities.

An important difference between activity-based costing and traditional costing is that under activity-based costing, _____.

multiple overhead rates are calculated

An activity driver is a measure of the demands placed on an activity and is also called:

output measure

Unit-level costs:

vary with the output volume. (Unit-level costs vary with the output volume; batch-level costs vary with the number of batches produced; product-sustaining costs vary with the number of product lines; and facility sustaining costs are those necessary to operate the plant facility.)

A clerk spends 35% of his time packaging parts and 65% of his time numbering parts. Assuming his salary is $30,000, calculate the amount of resource cost assigned to the numbering activity.

$19,500 (Packaging activity = 0.35 × $30,000 = $10,500 Numbering parts = 0.65 × $30,000 = $19,500)

Steven Co. has two products: A and B. The following is information about the assembly activity in its factory: Estimated cost Estimated activity Product A Product B Total Assembly $14,400 480 260 740 The activity rate for the Assembly Department is closest to:

$19.46 (An activity rate is used in place of a single, plantwide rate. It calculates a rate for each overhead activity, in this case, assembly. Activity Rate = $14,400 / 740 = $19.46)

Aquamarine Company produces precision parts for 16 major buyers. Of the 20 customers, one accounts for 40% of the sales, with the remaining 15 accounting for the rest. The 15 smaller customers purchase parts in equal quantities. Data concerning Aquamarine's customer activity follow: Large Customer Fifteen | Smaller Customers Units purchased 200,000 | 200,000 Orders placed 4 | 120 Number of sales calls 20 | 230 Manufacturing costs $6,000,000 | $6,000,000 Order filling costs allocated* $310,000 | $310,000 Sales force costs allocated* $150,000 | $150,000 *Allocated based on sales volume Customer-driven costs are assigned to customers based on units sold, which is a unit-level driver. Compute the cost associated with the large customer.

$44,000 (https://www.chegg.com/homework-help/questions-and-answers/company-produces-precision-components-company-11-customers-one-accounts-60-percent-th-esal-q7899913)

Ace Manufacturing identifies the following activities and drivers for its operations: Activity | Activity Driver | Driver Quantity Moving Materials | Number of moves | 100 Machining | Machine hours | 10,000 Ace estimates Moving Materials and Machining will cost $900,000 and $3,000,000 respectively. Ace's activity rates are:

$9,000 per move and $300 per machine hour. (Activity rate for Moving=Respective cost/Respective activity) (https://www.chegg.com/homework-help/questions-and-answers/ace-manfacturing-identifies-following-activities-drivers-operations-moving-number-moves-20-q31236770)

Ace Manufacturing identifies the following activities and drivers for its operations: Activity Activity Driver Driver Quantity Moving Materials Number of moves 200 Machining Machine hours 10,000 Ace estimates Moving Materials and Machining will cost $1,600,000 and $4,000,000 respectively. Ace's activity rates are:

Activity rate for Moving=Respective cost/Respective activity =(1,600,000/200)=$8000 per move and for Machining=$4,000,000/10,000=$400 per machine hour (Activity Rate = Activity Cost / Activity Driver Quantity, or Moving Materials $8,000 ($1,600,000 / 200) and Machining $400 ($4,000,000 / 10,000))

Which of the following stages are a part of activity-based costing? I. Trace costs to activities II. Overhead costs are assigned to cost objects III. Trace costs to cost objects IV. Overhead costs are assigned to a plant or department

I and III

Identify the first step in designing an activity-based system.

Identifying activities involved

Which of the following is true of activity-based costing?

It is used by organizations that manufacture only one product.

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

Scheduling goods

Identify a true statement about activity-based supplier costing.

The costs are tracked by considering quality, reliability, and late deliveries made by a supplier.

In an activity-based customer costing system, the cost of the resources consumed is assigned to:

activities (In activity-based customer costing, the cost of the resources consumed is assigned to activities, and the cost of the activities is assigned to individual customers using activity drivers.)