Question

1. Tatman Corporation uses an activity-based costing system with the following three activity cost pools:

Activity Cost Pool	Total Activity
Fabrication	10,000 Machine-hours
Order Processing	800 Orders
Other	N/A

The other activity pool is used to accumulate costs of idle capacity and organization-sustaining costs.

The company has provided the following data concerning its costs:

Wages and Salaries	320,000
Depreciation	220,000
Occupancy	120,000
Total	660,000

The distribution of resource consumptions across activity cost pools is given below:   (Activity Cost Pools/Order)

	Fabrication	Processing	Other	Total
Wages and salaries	20%	65%	15%	100%
Depreciation	15%	35%	50%	100%
Occupancy	5%	70%	25%	100%

        

         The activity rate for the Fabrication activity cost pool is closest to:

$3.30 per machine-hour

$13.20 per machine-hour

$10.30 per machine-hour

$8.80 per machine-hour

2. Mayeux Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:

Costs:

       Wages & salaries        $320,000

       Depreciation               $160,000

       Utilities               $240,000

       TOTAL                          $720,000

Distribution of resource consumption:

	Assembly	Setting Up	Other	Total
Wages & salaries	50%	40%	10%	100%
Depreciation	10%	55%	35%	100%
Utilities	15%	50%	35%	100%

How much cost, in total, would be allocated in the first-stage allocation to the Setting Up activity cost pool?

$360,000

$336,000

$288,000

$348,000

3. Feldpausch Corporation has provided the following data from its activity-based costing system:

Activity Cost Pool	Total Cost	Total Activity
Assembly	$1,137,360	84,000 machine-hours
Processing orders	$28,479	1,100 orders
Inspection	$97,155	1,270 inspection-hours

The company makes 470 units of product W26B a year, requiting a total of 660 machine-hours, 50 orders, and 40 inspection-hours per year. The product’s direct materials cost is $40.30 per unit and its direct labor cost is $42.22 per unit. The product sells for $118.00 per unit. According to the activity-based costing system, the product margin for product W26B is:

$6,444.70 per unit

$4,679.20 per unit

$3,384.70 per unit

$16,675.60 per unit

4. Francis Manufacturing Company is currently preparing its cash budge for the next month and has gathered the following information:

Expected cash receipts	$39,400
Expected disbursements:
Direct Materials	$12,000
Direct Labor	$9,000
Manufacturing Overhead	$11,500
Selling/Administrative Expenses	$22,000

The beginning cash balance will be $6,000 and the company requires a minimum cash balance at the end of the month of $5,000. How much will Francis Manufacturing need to borrow to meet its cash needs for the month?

$9,100

$14,100

$20,100

None of these

Answer 1

1 Tatman Co Total Costs Allocation to Fabrication Cost Allocated Wages & Salaries Depreciation Occupancy 320,000 220,000 120,000 20% 5% 5% 64,000 (total Costs allocation Rate) 33,000 (total Costs allocation Rate) 6,000 (total Costs allocation Rate) Total fabrication Machine Hours 10,000 Activity Rate for Fabrication 10.30 Per machine hour Allocation Rate/Machine hrs) Co ration Total Costs Allocation to Setting U Cost Allocated Wages & Salaries Depreciation Utilities 320,000 160,000 240,000 128,000 (total Costs allocation Rate) 55% 50% Cost Allocated to Setting Up activity 88,000 (total Costs allocation Rate) 120,000 (total Costs allocation Rate 336,000 3. Feld Total Cost Total Activit Rate to be applied Assembly Processing Orders Inspection 1,137,360 28,479 97,155 84,000 1,100 1,270 13.54 (total Costs total Activity) 25.89 (total Costs total Activity) 76.5 (total Costs total Activity) Cost allocation for 470 units Activity required for 470 units Assembly Processing Orders Inspection 660 50 40 8,936 (activity "rate) 1,295 3,060 Total Allocated Cost 13,291 Product W26B Per Unit For 470 Units Selling Price 118.00 55,460.00 Direct Material Direct Labor Allocated Costs 40.30 42.22 18,941.00 19,843.40 13,290.90 52,075.30 Total Costs Product Margin 3,384.70 4. Francis Manufacturing Com BeginninghBnce Add 6,000 Expected cash receipts 39,400 Cash Available for disbursement 45,400 Expected disbursements: Direct Materials Direct Labor Manufacturing Overhead Selling/Administrative Expense 12,000 9,000 11,500 22,000 54,500 Cash Deficit Expected Cash Balance 9,100 5,000 14,100 uired