ABC Inc. produces a single product and manufactured 20,000 units last year. The company budgeted the following overhead costs for the year:

Indirect Factory Wages:	$100,000
Factory Utilities:	$ 40,000
Factory Depreciation:	$ 60,000

Direct manufacturing costs per unit are $50. The company uses an activity-based costing system which compiles costs into 3 cost pools, machining, milling and assembly. The costs allocated to these activity cost pools break down as follows:

Usage:

Cost:	Machining	Milling	Assembly
Indirect Factory Wages:	50%	30%	20%
Factory Utilities:	40%	40%	20%
Factory Depreciation:	10%	90%	0%

The following cost drivers are used for each of the following activity cost pools:

• Machining: Machine Hours
• Milling: Milling Hours
• Assembly: Direct Labour Hours

Practical capacity for each of the cost pools are shown below:

• Machining: 18,000 Machine Hours.
• Milling: 40,000 Milling Hours.
• Assembly: 12,500 Direct Labour Hours

Actual Usage was as follows:

• Machining: 40,000 Machine Hours.
• Milling: 40,000 Milling Hours.
• Assembly: 15,000 Direct Labour Hours.

The budgeted overhead rate to be charged for the Assembly activity was:

Multiple Choice

• $2/Machine HourIncorrect

• $7/Milling Hour

• $2.24/Direct Labour Hour

• $1/Machine Hour $

• 2. Which of the following is not part of the implementation process with respect to ABC?

• Multiple Choice

• Identify and define activities and cost pools.

• Create homogeneous cost pools.Incorrect

• Separate manufacturing and non-manufacturing costs.

• Prepare management reports.

• 3 . The operations vice-president of the Regal Bank of Canada, Kristin Wu, has been interested in investigating the efficiency of the banks operations. She has been particularly concerned about the costs of handling routine transactions at the bank and would like to compare these costs at the banks various branches. If the branches with the most efficient operations can be identified, their methods can be studied and then replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt thus far to show how those costs are related to the various services provided by the bank. Wu has asked for your help in conducting an ABC study of bank operations. In particular, she would like to know the cost of opening an account, the cost of processing deposits and withdrawals, and the cost of processing other customer transactions.

• The Windsor branch of the Regal Bank of Canada submitted the following cost data for last year:

  Teller wages	$150,000
  Assistant branch manager salary	70,000
  Branch manager salary	85,000
  Total	$305,000

  Virtually all of the other costs of the branchrent, depreciation, utilities, and so onare organization-sustaining costs that cannot be meaningfully assigned to individual customer transactions, such as depositing cheques.

  In addition to the cost data above, the employees of the Windsor branch have been interviewed concerning how their time was distributed last year across the activities included in the activity based costing study. The results of those interviews appear below:

  	Distribution of Resource Consumption across Activities
  	Opening Accounts		Processing Deposits and Withdrawals		Processing Other Customer Transactions		Other Activities		Totals
  Teller wages	0	%	75	%	15	%	10	%	100	%
  Assistant branch manager salary	10	%	15	%	25	%	50	%	100	%
  Branch manager salary	0	%	0	%	20	%	80	%	100	%

  The manager of the Windsor branch of the Regal Bank of Canada has provided the following data concerning the transactions of the branch during the past year:

  Activity	Total Activity at the Windsor Branch
  Opening accounts	200	accounts opened
  Processing deposits and withdrawals	50,000	deposits and withdrawals
  Processing other customer transactions	1,000	other customer transactions

  Required:

  1. Using the first-stage allocation data and above tables, compute the activity rates for the ABC system. (Round your answers to 2 decimal places.)