Denise Ramsey Acc560 Assignment 8

Question 8-4
Unit level- is performed each time a unit is produced.
Batch- level -are performed each time a batch is handled o0r processed, regardless of how many units are in the batch.
Product -level activities- relate to specific products and typically must be carried out regardless of how many batches are run.
Customer-level activities- relates to customers and activities such as sales calls, catalog mailings etc. Organization-sustaining activities- are carried out regardless of which computers are served.
Question 8-6
The two stages are internal decision making and managing activities.
Exercise 8-2 Travel Pick up C/S Other Totals
Driver and guard wages…… $336,000 $378,000 $84,000 $42,000 $840,000
Vehicle operating…………. 202,500 13,500 0 54,000 270,000
Vehicle depreciation……… 105,000 15,000 0 30,000 150,000
Customer rep…………….. 0 0 153,000 27,000 180,000
Office expenses…………. 0 10,000 14,000 16,000 40,000
Administrative……….. 0 17,000 187,000 136,000 340,000
Total cost……………… $643,500 $433,500 $438,000 $305,000 $1,820,000
Exercise 8-3
Activity Cost Pool Est.O/H Expected Activity
Caring for lawn…….. $77,400 180,000 square feet of lawn $0.43
Caring for garden…….. $30,000 24,000 square feet of low maint.beds $1.25
Caring for garden beds high. $57,600 18,000 Square feet of high mat. Beds $3.20
Travel for jobs………….. $4,200 15,000 miles $0.28
Customer billing and service… $8,700 30 customer $290
Exercise 8-4
Activity Cost Pool Activity Rate Activity ABC
Supporting direct labor……. $7 per direct labor-hr 1,000 direct labor hours $7,000
Machine processing……….. $3 per machine hr 3,200 machine hours 9,600
Machine set ups……….. $40 per set up 5 set ups 200
Production orders………. $160 per order 5 order 800
Shipments………. $120 per shipment 10 shipment 1,200
Product sustaining ……… $800 per product 1 product 800
Total O/H cost……… $19,600

Denise Ramsey ACC560 Assignment 8

Exercise 8-4 cont: Activity Cost Pool Activity Rate Activity ABC Supporting D/L……. $7 per direct /hrs 40 direct labor/hrs $280
Machine processing…. $3 per machine/hr 30 machine/hrs 90
Machine set-ups ………$40 per setup 1 set-ups 40
Production orders……. $160 per order 1 orders 160
Shipment……….. $120 per shipment 1 shipments 120
Product sustaining……. $800 per product 1 product 800
Total overhead cost……… $1,490

Exercise 8-11
Activity Cost Pools Total Cost Total Activity

Opening accounts…….. $7,000 200 accounts opened $35.00 per accounts open
Processing deposits……$123,000 50,000 deposits and withdraws $2.46 per open withdraw.
Processing other cust. Trans…..$57,000 1,000 other cut.tran. $57.00 per open tran.

2. Cost of opening at the Avon branch is much higher than cost branch.