16 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	5,000	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	29
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

• $281,624

• $1,624

• $280,000

• 17

  Assume a company manufactures only two products14,000 units of Product A and 6,000 units of Product B. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products A and B:

  Activity Cost Pool	Activity Measure	Estimated Overhead Cost	Expected Activity
  Machining	Machine-hours	$ 300,000	10,000	MH
  Machine setups	Number of setups	$ 150,000	200	Setups
  Product design	Number of products	$ 78,000	2	Products

  Activity Measure	Product A	Product B
  Machine-hours	9,000	6,000
  Number of setups	50	150
  Number of products	1	1

  Using the ABC system, how much total overhead cost would be assigned from all of the activities to Product A?

  Multiple Choice

• $346,500

• $336,500

• $326,500

• $356,500