15

Assume a companys activity-based costing system includes three activities. The following information is available with respect to those activities:

Activity Cost Pool	Estimated Overhead Cost	Expected Activity
Travel	$ 130,000	100,000	miles driven
Deliveries	$ 110,000	2,200	customer deliveries
Customer service	$ 220,000	10,000	phone calls

What is the activity rate for the Travel activity?

Multiple Choice

• $1.13 per mile driven

• $0.13 per mile driven

• $1.30 per mile driven

• $13.00 per mile driven

14

Assume a companys activity-based costing system includes three activities with the following activity rates:

Activity Cost Pool	Activity Rate
Travel	$ 2	per mile driven
Deliveries	$ 65	per delivery
Customer service	$ 22	per phone call

Two of the companys many customers include Customer A and Customer B. These two customers consumed the companys activities as follows:

	Total Expected Activity
	Customer A	Customer B
Travel (number of miles driven)	300	250
Deliveries (number of deliveries)	15	7
Customer service (number of phone calls)	20	12

How much cost would be assigned from the Deliveries activity to Customer B?

Multiple Choice

• $455

• $1,410

• $955

• $14

13

Assume a service company has implemented an activity-based costing system with five activities as shown below:

Activity Cost Pool (Activity Measure)	Total Cost	Total Activity
Customer deliveries (Number of deliveries)	$ 400,000	8,000	deliveries
Manual order processing (Number of manual orders)	$ 280,000	2,000	manual orders
Electronic order processing (Number of electronic orders)	$ 150,000	15,000	electronic orders
Line item picking (Number of line items picked)	$ 450,000	375,000	line items
Other organization-sustaining costs (None)	$ 300,000

The company serves numerous customers, two of which include Hospital A and Hospital B. The activity demands pertaining to these two customers are as follows:

Activity Measure	Activity
	Hospital A	Hospital B
Number of deliveries	10	25
Number of manual orders	0	35
Number of electronic orders	15	0
Number of line items picked	120	250

How much cost would be assigned from the Manual Order Processing activity to Hospital B?

Multiple Choice

• $2,800

• $284,900

• $280,000

• $4,900