1. Maxx Inc. has provided the following data from its activity-based costing system:

Activity Cost Pools Total CostTotal Activity

Designing products$375,0006,540 product design hours

Setting up batches$52,6787366 batch set-ups

Assembling products$25,1224,018 assembly hours

The activity rate for the designing products activity cost pool is:

2. SashaCompany allocates the estimated $182,000 of its accounting department costs to its production and sales departments since the accounting department supports the other two departments particularly with regard to payroll and accounts payable functions. The costs will be allocated based on the number of employees using the direct method. Information regarding costs and employees follows:

Department

Employees

Accounting

4

Production

36

Sales

15

How much of the accounting department costs will be allocated to the production?

3. MedusaCompany allocates costs from the payroll department (S1) and the maintenance department (S2) to the molding (P1), finishing (P2), and packaging (P3) departments. Payroll department costs are allocated based on the number of employees in the department and maintenance department costs are allocated based on the number of square feet which the production department occupies within the factory.Information about the departments is presented below:

Number of

Number of Square

Department

Costs

Employees

Feet Occupied

Payroll (S1)

$131,000.00

2

2,000

Maintenance (S2)

$220,000

8

64,000

Molding (P1)

71

100,000

Finishing (P2)

45

60,000

Packaging (P3)

16

40,000

Medusauses the direct method to allocate costs. Round all answers to the nearest dollar.

What amount of the payroll department costs will be allocated to the molding department?

4. TheManassas Company has55 obsoletekeyboards that are carried in inventory at a cost of $9,600.If these keyboards are upgraded at a cost of $7,500, they could be sold for $20,000.Alternatively, thekeyboards could be sold as is for $8,700.What is the net advantage or disadvantage of re-working the keyboards?

5. RitzCompany sells fine collectible statues and has implemented activity-based costing. Costs in the shipping department have been divided into three cost pools. The first cost pool contains costs that are related to packaging and shipping and Rand has determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final inspection of each item before it is shipped and the cost driver for this pool is the number of individual items that are inspected and shipped. The final cost pool is used for general operations and supervision of the department and the cost driver is the number of shipments. Information about the department is summarized below:

Cost Pool

Total Costs

Cost Driver

Annual Activity

Packaging and shipping

$163,400.00

Number of boxes shipped

23,500boxes

Final inspection

$198,500.00

Number of individual items shipped

96,200items

General operations and supervision

$83,400.00

Number of orders

9,100orders

During the period, the Far East sales office generated682 orders for a total of6,090 items. These orders were shipped in1,402 boxes. What amount of shipping department costs should be allocated to these sales?

6. A company has $6.10 per unit in variable costs and $3.70 per unit in fixed costs at a volume of 50,000 units. If the company marks up total cost by 0.47, what price should be charged if 66,000 units are expected to be sold?

7. A new product is being designed by an engineering team at Golem Security. Several managers and employees from the cost accounting department and the marketing department are also on the team to evaluate the product and determine the cost using a target costing methodology. An analysis of similar products on the market suggests a price of $121.00 per unit. The company requires a profit of0.19 of selling price. How much is the target cost per unit?