Question 5: Question 6: 5 TB MC Qu. 7-174 Nissley Wedding Fantasy Corporation ma
ID: 2564116 • Letter: Q
Question
Question 5:
Question 6:
5 TB MC Qu. 7-174 Nissley Wedding Fantasy Corporation makes Nissley Wedding Fantasy Corporation makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity rates in its activity-based costing system 10 points Activity Cost Pools Size-related Complexity-related Order-related Activity Rate $1.25 per guest 28.34 per tier 74.84 per order References The measure of activity for the size-related activity cost pool is the number of planned guests at the wedding reception. The greater the number of guests, the larger the cake. The measure of complexity is the number of tiers in the cake. The activity measure for the order-related cost pool is the number of orders. (Each wedding involves one order) The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do not include the costs of purchased decorations such as miniature statues and wedding bells, which are accounted for separately Data concerning two recent orders appear below: Tijerina Twersky Wedding Wedding 125 Number of reception guests Number of tiers on the cake Cost of purchased decorations for cake $28.90 $54.76 50 Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Tijerina wedding cake to just break even? Multiple Choice $28.90 $222.92 $269.61 $74.84Explanation / Answer
activity driver
activity driver rate* units of activity deriver
total
size related
50*1.25
62.5
complexity related
28.34*2
56.68
order related
74.84*1
74.84
cost of purchase decoration for cake
28.9*1
28.9
total cost
222.92
total cost to break even
answer is B
222.92
equipment expense
129000
equipment expense
allocation
total equipment overhead assigned to department = allocation rate*equipment expense
processing
0.6
77400
supervising
0.2
25800
other
0.2
25800
total
129000
indirect labor
8200
equipment expense
allocation
total indirect labor overhead assigned to department = allocation rate*equipment expense
processing
0.6
4920
supervising
0.3
2460
other
0.1
820
total
8200
processing
77400
4920
82320
supervising
25800
2460
28260
other
25800
820
26620
machine hours
F6
14800
X0
1210
total machine hours
16010
overheads assigned to processing
82320
overhead rate per machine hour
82320/16010
5.14
Batches
F6
700
X0
970
total batches
1670
overheads assigned to processing
28260
overhead rate per batch
28260/1670
16.92
overhead cost assigned to product X0
cost of activity driver*no of units of cost driver assigned
total overhead assigned
overhead assigned to processing
5.14*1210
6219.4
overhead assigned to supervising
16.92*970
16412.4
total overhead assigned to X0
22631.80
total overhead assigned to X0
22632
activity driver
activity driver rate* units of activity deriver
total
size related
50*1.25
62.5
complexity related
28.34*2
56.68
order related
74.84*1
74.84
cost of purchase decoration for cake
28.9*1
28.9
total cost
222.92
total cost to break even
answer is B
222.92
equipment expense
129000
equipment expense
allocation
total equipment overhead assigned to department = allocation rate*equipment expense
processing
0.6
77400
supervising
0.2
25800
other
0.2
25800
total
129000
indirect labor
8200
equipment expense
allocation
total indirect labor overhead assigned to department = allocation rate*equipment expense
processing
0.6
4920
supervising
0.3
2460
other
0.1
820
total
8200
processing
77400
4920
82320
supervising
25800
2460
28260
other
25800
820
26620
machine hours
F6
14800
X0
1210
total machine hours
16010
overheads assigned to processing
82320
overhead rate per machine hour
82320/16010
5.14
Batches
F6
700
X0
970
total batches
1670
overheads assigned to processing
28260
overhead rate per batch
28260/1670
16.92
overhead cost assigned to product X0
cost of activity driver*no of units of cost driver assigned
total overhead assigned
overhead assigned to processing
5.14*1210
6219.4
overhead assigned to supervising
16.92*970
16412.4
total overhead assigned to X0
22631.80
total overhead assigned to X0
22632
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