1- (choose the correct) Each activity cost pool is assigned a unit of measurement to align best with the activity of the cost pool. What would be the best unit of measure to assign a cost pool of "design changes"?

- Estimated # of costumer service calls

- Estimated # of machine hours

- Estimated # of man hours

- Estimated # of design changes

2- True or False; Activity Based Costing could be used to determine customer satisfaction and quality issues?

3- (choose the correct answer) In your homework problem with the table and chairs. Why do you think the chair product assembly cost was so high when the processing and customer support costs were the same between the two products.

- Because each chair must be sold with multiple tables so therefore the cost should be higher. Each order comprised of a set of one chair and multiple tables so the processing and customer costs were the same.

- Because each table must be sold with multiple chairs so therefore the cost should be higher. Each order comprised of a set of one table and multiple chairs so the processing and customer costs were the same.

- Because chairs are much more complex to make.

- Who the heck knows

Example: Company makes two products Table and Chairs Step 1: Identify cost Pools and percentage of allocation Activity Cost Pools Percentage of costs Assigned by Mgmt Unit of Measurement as assigned by Mgmnt Product Assembly 45% Estimated Number of Units 25,000 Processing of Orders 15% Estimated Number of Orders 5,000 Customer Support 30% Estimated Number of Cust 502 Other 15% N/A N/A