10 Assume that the Tasty Ice Cream Company is considering the costs of two of th
ID: 2339830 • Letter: 1
Question
10 Assume that the Tasty Ice Cream Company is considering the costs of two of their product lines-ice cream sandwiches and dessert bars. The company identified the following partial list of activities, costs, and activity drivers expected for the next year Expected Costs Activity Extrusion costs Packaging costs Cost Driver Number batches made Number of units made 637,500 350,000 units 400 batches Dessert Bars 200,000 units 350 batches Batches made How much overhead cost will be assigned to the ice cream sandwich product line using activity-based costing (ABC)? A. $340,000 B. $368,000 C. $28,000 D. $850.08 E. $433,682 11. Consider the following activities that take place in a medical clinic 1.) Cleaning exam rooms (2.) Heating and air conditioning the clinic (3.) Sending blood work to a lab. (4.) Dispensing medicine. Which of the following statements is true? A. Cleaning rooms and heating the clinic are both unit level activities. . Sending blood work to the lab is a batch level activity C. Sending blood work and dispensing medicine are both batch level activities D. Cleaning rooms and dispensing medication are both product or service level activities E. Heating the clinic and dispensing medication are both batch level activities A company uses activity-based costing to determine the costs of its three products: A, Band C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the table. 12. Activity Cost Pool Budgeted Cost Budgeted Activity Activity Activity 2 Activity 3 $70,000 $45,000 $82,000 Product A Product B Product C 6,000 9,000 20,000 7,000 15,0008,000 2,500 1,0001,625 How much overhead will be assigned to Product B using activity-based costing? A. $56,500 B. $78,000 E. $70,000 C. $62,500 D. $197,000 13. Which of the following is true? Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor A. B. The departmental OH rate is not usually based on measures dlosely related to production volume C. D. E. The departmental overhead rate is most accurate in assigning overhead costs that are not driven by production volume Allocated overhead costs will be the When cost analysts are able to logically trace cost objects to costs, costing accuracy is improved. same no matter which allocation method is used.Explanation / Answer
10
Answer:
overhead cost Assigned =$368,000
Working notes for the above answer is as under
Activity
Expected Costs
Cost Driver
Total Activity
Activity Rate ( Expected Costs / Total Activity )
A
B
C=A/B
Extrusion Costs
6,37,500
Number batches made
750
850
Packaging Costs
44,000
Number of units made
5,50,000
0.08
Cost Driver
Activity Rate
Activity
overhead cost Assigned (Activity Rate * Activity)
A
B
C=A*B
Number batches made
850
400
340,000
Number of units made
0.08
350,000
28,000
Total overhead cost Assigned
368,000
_____________________________________________________
11 True statement is
Answer: Sending blood work to the lab is a batch level activity
_______________________________________________________
12
Answer: $56,500
Working notes for the above answer is as udder
Activity Cost pool
Budgeted
cost
Total Activity
Rate
A
B
C=A/B
Activity -1
70000
35000
2
Activity -2
45000
30000
1.5
Activity -3
82000
5125
16
Rate
Total Activity
Cost
A
B
C=A*B
Activity -1
2
9000
18000
Activity -2
1.5
15000
22500
Activity -3
16
1000
16000
Overhead cost assigned to product B
56500
__________________________________
13
true statement
Answer:
Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor
Activity
Expected Costs
Cost Driver
Total Activity
Activity Rate ( Expected Costs / Total Activity )
A
B
C=A/B
Extrusion Costs
6,37,500
Number batches made
750
850
Packaging Costs
44,000
Number of units made
5,50,000
0.08
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