1.Fence Industries is preparing its annual profit plan. As part of its analysis of the profitability of its customers, management estimates that the $12,000 for sales support should be assigned to the individual customers from the information given as follows:

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	Customer A	Customer B
Units purchased	100,000	200,000
Purchase orders (annual)	5	20

What is the amount of the sales support costs that should be allocated to Customer B, assuming Fence uses units purchased to compute activity-based costs?

a.) $2,400.

b.) $4,000.

c.) $8,000.

d.) $9,600.

2.Republic Industries decides to price delivery service according to the results of a recent activity-based costing (ABC) study. The study indicates Republic should charge $8 per order, 2% of the order's value for general delivery costs, $1.25 per item, and $30 for delivery.

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A year later, Republic collected the following information for two of its best customers:

Cost driver	Customer C				Customer D
Number of orders		18				8
Number of deliveries		10				10
Number of items		2,000				4,000
Order value	$	120,000			$	80,000

What are the total delivery costs charged to Customer D during the year?

a.) $5,344.

b.) $5,364.

c.) $6,900.

d.) $6,964.

3. Express Travel decides to price delivery service according to the results of a recent activity-based costing (ABC) study. The study indicates Express Travel should charge $16 per order, 1% of the order's value for general delivery costs, $2.50 per item, and $45 for delivery.

A year later, Express Travel collected the following information for three of its customers:

Cost driver	Customer A				Customer B				Customer C
Number of orders		18				8				12
Number of deliveries		10				10				24
Number of items		2,000				4,000				12,000
Order value	$	120,000			$	80,000			$	100,000

What are the total delivery costs charged to Customer B during the year?

a.) $13,490.

b.) $11,378.

c.) $10,800.

d.) $10,578.

4. South Beach Industries reports the following information about resources. At the beginning of the year, South Beach estimated it would spend $180,000 for materials, $42,000 for purchasing, $35,000 for setups, and $36,000 for repairs.

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	Cost Driver
	Rate			Volume
Resources used
Materials	$	10	/lb	18,350	lbs
Purchasing	$	250	/purchase order	160	purchase orders
Setups	$	450	/setup	80	setups
Repairs	$	36	/job	700	jobs
Resources supplied
Materials	$	192,700
Purchasing	$	44,300
Setups	$	37,500
Repairs	$	30,000

Compute unused resource capacity for purchasing for South Beach.

a.) $5,538.

b.) $2,000.

c.) $4,300.

d.) $2,300.

5.Denim Products reports the following information about resources. At the beginning of the year, Denim estimated it would spend $84,000 for setups and $41,000 for quality testing.

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	Cost Driver
	Rate			Volume
Resources used
Setups	$	250	/run	350	runs
Quality testing		40	/test	900	tests
Resources supplied
Setups	$	90,000
Quality testing		40,000

Compute unused resource capacity for setups for Denim Products.

a.) $6,000.

b.) $2,500.

c.) $1,000.

d.) $3,500.