Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Chapter 7.A, Problem 4P
PROBLEM 7A-4 Time-Driven Activity-Based Costing LO 7-6, LO 7-7
Stahl Company is conducting a time-driven activity-based costing study in its Shipping Department. To aid the study, the company provided the following data regarding its Shipping Department and the customers served by the department:
| Customer L | Customer M | Customer N | All Customers |
|
| Number of line items picked | .. 280 | 160 | 90 | 335,000 |
| Number of boxes packaged | .. 50 |
20 | 15 | 46,800 |
| Number of deliveries loaded | .. 6 | 2 | 10 | 12,100 |
Required:
- Using the customer cost analysis shown in Exhibit 7A-2 as your guide, compute the following:
- The cost per minute of the resource supplied in the Shipping Department.
- The time-driven activity rate for each of Stahl's three activities.
- The total labor costs consumed by Customer L. Customer M. and Customer N.
- Using the capacity analysis shown in Exhibit 7A-3 as your guide, compute the following:
- The used capacity in minutes.
- The unused capacity in minutes.
- The unused capacity in number of employees. (Do not round your answer to a whole number.)
- The impact on expenses of matching capacity with demand. (Be sure to round your potential adjustment in the number of employees to a whole number.)
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Problem 1. Mahinahon Company would like to institute an activity-based costing system to price products. The company's Purchasing Department incurs costs of P550,000 per year and has six employees.
Purchasing has determined the three major activities that occur during the year.
Activity
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Measure
# of People
Total Cost
Issuing purchase orders
# of purchase orders
1
P285,000
Reviewing receiving reports
# of receiving reports
2
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Making phone calls
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3
P220,000
During the year, 50,000 phone calls were made in the department; 15,000 purchase orders were issued;
and 10,000 shipments were received. Product A required 200 phone calls, 150 receiving reports, and
50 purchase orders. Product B required 350 phone calls, 400 receiving reports, and 100 purchase
orders.
1Determine the amount of purchasing department cost that should be assigned to each
of these products.
1.2. Determine purchasing department cost per…
Problem 2
Milky Corporation has provided the following data from its activity-based costing accounting system:
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answer must be in nearest peso
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The activity rate for the "setting up batches" activity cost pool is
answer should be in nearest peso
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The activity rate for the "assembling products" activity cost pool is
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Part 3: Activity-Based Costing
Similarly, Mr. Suncat has a couple of questions for you regarding the activity-based costing method. He has
provided the following additional information:
Cost
Pools
Initial customer
meeting
Purchasing
ingredients
Cost
Drivers
Number of hours
spent with
customer
Number of
purchase
requisitions
Direct Labor
hours
Estimated
Overhead
$15,000
$15,000
$40,000
$70,000
3. Custom Wedding Cake
Expected
Use of Cost
Drivers
4.5 hours
$10,000
1000
requisitions
5.5 hours
9.5 hours
Expected
Use of Cost
Driver:
Basic
Wedding
Cake
0.75 hour
Making and
baking the
wedding cakes
Decorating the
wedding cakes
Final customer
Direct Labor
hours
Number of
meeting and cake wedding cakes
delivery
a. Explain the difference between a job-order costing system and an activity-based costing system.
4200
150
requisitions
1.25 hour
1.75 hours
Expected
Use of Cost
Driver
Multi-Layer
Wedding
Cake
1.25 hours
1500 cakes
300
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Chapter 7 Solutions
Managerial Accounting
Ch. 7.A - EXERCISE 7A-1 Time-Driven Activity-Based Costing...Ch. 7.A -
EXERCISE 7A-2 Time-Driven Activity-Based Costing...Ch. 7.A - EXERCISE 7A-3 Time-Driven Activity-Based Costing...Ch. 7.A - PROBLEM 7A-4 Time-Driven Activity-Based Costing LO...Ch. 7.A - PROBLEM 7A-5 Time-Driven Activity-Based Costing LO...Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - What are unit-level, batch-level, product-level,...Ch. 7 - What types of costs should not be assigned to...
Ch. 7 - What are the two stages off allocation in...Ch. 7 - Why is the first stage of the allocation process...Ch. 7 - When activity-based costing is used, why do...Ch. 7 - Prob. 9QCh. 7 - Why is the form of activity-based costing...Ch. 7 - The Excel worksheet form that appears below is to...Ch. 7 - Prob. 2AECh. 7 - The Excel worksheet form that appears below is to...Ch. 7 - Prob. 1F15Ch. 7 - Prob. 2F15Ch. 7 - Prob. 3F15Ch. 7 - Prob. 4F15Ch. 7 - Prob. 5F15Ch. 7 - Prob. 6F15Ch. 7 - Prob. 7F15Ch. 7 - Prob. 8F15Ch. 7 - Prob. 9F15Ch. 7 - Prob. 10F15Ch. 7 - Prob. 11F15Ch. 7 - Prob. 12F15Ch. 7 - Prob. 13F15Ch. 7 - Prob. 14F15Ch. 7 - Prob. 15F15Ch. 7 - Prob. 1ECh. 7 - Prob. 2ECh. 7 - Prob. 3ECh. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - EXERCISE 7-7 First-Stage Allocations LO7-2
The...Ch. 7 - Prob. 8ECh. 7 - Prob. 9ECh. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - EXERCISE 7-13 Computing ABC Product Costs LO7-3,...Ch. 7 - Prob. 14ECh. 7 - Prob. 15ECh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 -
PROBLEM 7-20 Evaluating the Profitability of...
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