CH5 quiz2

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School

University of North Texas *

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Course

5130

Subject

Accounting

Date

Jan 9, 2024

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pdf

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Uploaded by vnguyen3

11/2/23, 9:01 PM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 1/8 1. Award: 1 out of 1.00 point Score: 10/10 Points 100 % Skyline Florists uses an activity-based costing system to compute the cost of making ﬂoral bouquets and delivering the bouquets to its commercial customers. Company personnel who earn $260,000 typically perform both tasks; other firm-wide overhead is expected to total $60,000. These costs are allocated as follows: Bouquet Production Delivery Other Wages and salaries 60% 30% 10% Other overhead 50% 40% 10% Skyline anticipates making 20,500 bouquets and 4,000 deliveries in the upcoming year. The cost of wages and salaries and other overhead that would be charged to each delivery is closest to: $25.50. $26.18. $32.62. $46.50. None of the answers is correct. Percentage of each type of labor that goes toward delivery activity ÷ Number of deliveries = [($260,000 × 30%) + ($60,000 × 40%)] ÷ 4,000 = $25.50 (rounded). ✓     

11/2/23, 9:01 PM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 2/8 2. Award: 1 out of 1.00 point Carlin and Marley, an accounting firm, provides consulting and tax planning services. For many years, the firm's total administrative cost (currently $282,000) has been allocated to services on this basis of billable hours to clients. A recent analysis found that 55% of the firm's billable hours to clients resulted from tax planning services, while 45% resulted from consulting services. The firm, contemplating a change to activity-based costing, has identified three components of administrative cost, as follows: Staff Support $204,000 In-house computing charges 54,000 Miscellaneous oﬃce costs 24,000 Total $282,000 A recent analysis of staff support found a strong correlation with the number of clients served. In contrast, in-house computing and miscellaneous oﬃce cost varied directly with the number of computer hours logged and number of client transactions, respectively. Consulting clients served totaled 40% of the total client base, consumed 35% of the firm's computer hours, and accounted for 25% of the total client transactions. If Carlin and Marley switched from its current accounting method to an activity-based costing system, the amount of administrative cost chargeable to consulting services would: decrease by $20,400. increase by $20,400. decrease by $48,600. change by an amount other than those listed. change, but the amount cannot be determined based on the information presented. Original: $282,000 × 45% = $126,900; New amount under ABC: [($204,000 × 40%) + ($54,000 × 35%) + ($24,000 × 25%)] = $81,600 + $18,900 + $6,000 = $106,500; $126,900 − $106,500 = $20,400 decrease. ✓     

11/2/23, 9:01 PM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 3/8 3. Award: 1 out of 1.00 point St. Vincent’s, Inc., currently uses traditional costing procedures, applying $803,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow. Product Pool No.1 (Driver: DLH) Pool No. 2 (Driver: SU) Pool No. 3 (Driver: PC) Beta 1,230 40 2,325 Zeta 2,870 60 775 Pool Cost $ 161,000 $ 281,000 $ 361,000 The overhead cost allocated to Beta by using activity-based costing procedures would be: $240,900. $371,550. $431,450. $562,100. None of the answers is correct. (Total Pool Costs for No. 1 × Pool No. 1 Beta ratio to Total Pool Costs) + (Total Pool Costs for No. 2 × Pool No. 2 Beta ratio to Total Pool Costs) + (Total Pool Costs for No. 3 × Pool No. 3 Beta ratio to Total Pool Costs) = [($161,000 × 1,230/4,100) + ($281,000 × 40/100) + ($361,000 × 2,325/3,100)] = $48,300 + $112,400 + $270,750 = $431,450.   ✓   

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