61. The FSOJ Company undertakes the following activities in its production operation and incurred the following costs during the first half of 20x2: Harvest apples Prepare apples for processing Extract juice from apples Process juice into apple juice concentrate apple juice or apple cider Package completed products $25,000 18,000 30,000 20,000 9,000 Processing the juice into 3 final products involves the use of 2 machines, each of which incurred amortization costs of $15,000 for the first half of 20x2. Each product requires a different set up on the processing machines, so FSOJ normally sets up the machines to produce concentrate for the first week of each month. The machine is then set up to produce apple juice for the next 2 weeks. Finally, workers set up the same machines to produce apple cider during the last week of each month During the first half of 20x2, 20% of the apples harvested were turned into apple juice concentrate, 50% were processed into apple juice, and 30% became apple cider. The relative sales values of each product were: 75% for apple juice, 20% for apple juice concentrate, and 596 for apple cider. The apple juice concentrate operation takes up 40% of FSOJ's total factory space. Regular apple juice and apple cider occupy 35% and 25%, respectively Which of the following activities is likely to be classified as product-level? a) Packaging b) Harvesting c) Extracting d) Prepare apples for processing Answer: a Difficulty: Easy Learning Objective: Use cost hierarchy to help assign costs to 62. The FSOJ Company undertakes the following activities in its production operation and incurred the following costs during the first half of 20x2: Harvest apples Prepare apples for processing Extract juice from apples Process juice into apple juice concentrate $25,000 20,000 18,000 62. The FSOJ Company undertakes the following activities in its production operation and incurred the following costs during the first half of 20x2: Harvest apples Prepare apples for processing Extract juice from apples Process juice into apple juice concentrate apple juice or apple cider Package completed products $25.000 18,000 30,000 20,000 9,000 Processing the juice into 3 final products involves the use of 2 machines, each of which incurred amortization costs of $15,000 for the first half of 20x2. Each product requires a different set up on the processing machines, so FSOJ normally sets up the machines to produce concentrate for the first week of each month. The machine is then set up to produce apple juice for the next 2 weeks. Finally, workers set up the same machines to produce apple cider during the last week of each month. During the first half of 20x2, 20% of the apples harvested were turned into apple juice concentrate, 50% were processed into apple juice, and 30% became apple cider. The relative sales values of each product were: 75% for apple juice, 20% for apple juice concentrate, and 5% for apple cider The apple juice concentrate operation takes up 40% of FSOJ's total factory space. Regular apple juice and apple cider occupy 35% and 25%, respectively. Assume processing costs are allocated on the basis of number of machine setups. How much processing cost will be allocated to each product line? a) $5,000 to each product line b) $7,500 each to apple juice concentrate and apple cider and $15,000 to apple juice c) $10,000 to each product line d) None of the above Answer: c Difficulty: Easy Learning Objective: Apply an ABC system in assigning costs 63. The FSOJ Company undertakes the following activities in its production operation and incurred the following costs during the first half of 20x2 Harvest apples Prepare apples for processing Extract juice from apples Process juice into apple juice concentrate $25,000 20,000 18,000 63. The FSOJ Company undertakes the following activities in its production operation and incurred the following costs during the first half of 20x2 Harvest apples Prepare apples for processing Extract juice from apples Process juice into apple juice concentrate apple juice or apple cider Package completed products $25,000 18,000 30,000 20,000 9,000 Processing the juice into 3 final products involves the use of 2 machines, each of which incurred amortization costs of $15,000 for the first half of 20x2. Each product requires a different set up on the processing machines, so FSOJ normally sets up the machines to produce concentrate for the first week of each month. The machine is then set up to produce apple juice for the next 2 weeks. Finally, workers set up the same machines to produce apple cider during the last week of each month. During the first half of 20x2, 20% of the apples harvested were turned into apple juice concentrate, 50% were processed into apple juice, and 30% became apple cider. The relative sales values of each product were: 75% for apple juice, 20% for apple juice concentrate, and 5% for apple cider. The apple juice concentrate operation takes up 40% of FSOJ's total factory space. Regular apple juice and apple cider occupy 35% and 25%, respectively. If juice extraction costs are allocated to product lines based on relative sales values, that is, each product line's portion of total sales, the amount allocated to apple cider will be a) $900 b) $5,400 c) $4,500 d) None of the above Answer: a Difficulty: Easy Learning Objective: Apply an ABC system in assigning costs CPA: Management Accounting 64. At least one cost driver is required for each ABC cost a) Activity b) Pool c) Object d) Product line