am I on the right track?

5:19 Manual Processing of invoice: 1 hour Electronic Processing of Invoice: .1 hour Maintain Customer File: .5 hours Annual costs for Accounts Receivable Dept is $500,000 Associated capacity of dept labor is 10,000 hours Six employees A) Cost rate for the Account Receivable Department $500,000/10,000=$50 an hour B) Division 1 has 100 customers who generate 10 million in sales resulting in 4000 manually inputted invoices. What is the annual activity based cost? 1000.5=500 hours 40001=4000 hours 4500 hours in total to manage these. 4500$50=$225,000 for the past two months, Ken thought it was demand of 550 lunches to arrive $3,300 fixed costs by the current costs per meal served. Noting that his at an estimate of $6 of support cost per meal had now increased, he contemplated raising his meal prices. Required (a) What is likely to happen if Ken continues to recompute his costs using the same approach if demand decreases further? (b) Advise Ken on choosing a cost driver quantity for computing support costs per meal and explain why you advocate your choice of quantity. Problems LO 3,5 5-19 Assigning corporate support costs, activity-based costing Zeta Department Store has developed the following information in order to develop a timedriven ABC model for its Accounts Receivable Department: 8 Chapter 5 Activity-Based Cost Systems The time to process payments of customer invoices depends on whether the customer pays the bill manually or electronically, as shown above. The time to maintain each customer file is the same for all customers. The annual cost of the Accounts Receivable Department is $500,000 and the associated practical capacity of accounts receivable labor is 10,000 hours. The Accounts Receivable Department has six employees. Required (a) What is the capacity cost rate for the Accounts Receivable Department? (b) Zeta's Division 1 has 1,000 small- to medium-sized customers who annually generate a total of $10 million in sales, resulting in 4,000 invoices. These customers pay all their invoices manually. What is the annual activity-based cost associated with Division 1 's customers? (c) Zeta's Division 2 has 200 large customers who annually generate a total of $10 million in sales, resulting in 400 invoices. These customers pay all of their invoices electronically. What is the annual activity-based cost associated with Division 2 's customers? (d) Suppose half of Zeta's Division 1 customers change their method of payment to electronic next year. How many hours of accounts receivable labor will it require for 1,000 customers, 2,000 manual invoices, and 2,000 electronic invoices? How much will Division 1 be charged for the accounts receivable function? Will Zeta's costs decrease because of the shift to 50% electronic invoicing in Division 1 ? 5:19 Manual Processing of invoice: 1 hour Electronic Processing of Invoice: .1 hour Maintain Customer File: .5 hours Annual costs for Accounts Receivable Dept is $500,000 Associated capacity of dept labor is 10,000 hours Six employees A) Cost rate for the Account Receivable Department $500,000/10,000=$50 an hour B) Division 1 has 100 customers who generate 10 million in sales resulting in 4000 manually inputted invoices. What is the annual activity based cost? 1000.5=500 hours 40001=4000 hours 4500 hours in total to manage these. 4500$50=$225,000 for the past two months, Ken thought it was demand of 550 lunches to arrive $3,300 fixed costs by the current costs per meal served. Noting that his at an estimate of $6 of support cost per meal had now increased, he contemplated raising his meal prices. Required (a) What is likely to happen if Ken continues to recompute his costs using the same approach if demand decreases further? (b) Advise Ken on choosing a cost driver quantity for computing support costs per meal and explain why you advocate your choice of quantity. Problems LO 3,5 5-19 Assigning corporate support costs, activity-based costing Zeta Department Store has developed the following information in order to develop a timedriven ABC model for its Accounts Receivable Department: 8 Chapter 5 Activity-Based Cost Systems The time to process payments of customer invoices depends on whether the customer pays the bill manually or electronically, as shown above. The time to maintain each customer file is the same for all customers. The annual cost of the Accounts Receivable Department is $500,000 and the associated practical capacity of accounts receivable labor is 10,000 hours. The Accounts Receivable Department has six employees. Required (a) What is the capacity cost rate for the Accounts Receivable Department? (b) Zeta's Division 1 has 1,000 small- to medium-sized customers who annually generate a total of $10 million in sales, resulting in 4,000 invoices. These customers pay all their invoices manually. What is the annual activity-based cost associated with Division 1 's customers? (c) Zeta's Division 2 has 200 large customers who annually generate a total of $10 million in sales, resulting in 400 invoices. These customers pay all of their invoices electronically. What is the annual activity-based cost associated with Division 2 's customers? (d) Suppose half of Zeta's Division 1 customers change their method of payment to electronic next year. How many hours of accounts receivable labor will it require for 1,000 customers, 2,000 manual invoices, and 2,000 electronic invoices? How much will Division 1 be charged for the accounts receivable function? Will Zeta's costs decrease because of the shift to 50% electronic invoicing in Division 1