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Assume a service company has implemented an activity-based costing system with five activities as shown below: Activity Cost Pool (Activity Measure) Customer deliveries (Number of
Assume a service company has implemented an activity-based costing system with five activities as shown below: Activity Cost Pool (Activity Measure) Customer deliveries (Number of deliveries) Manual order processing (Number of manual orders) Electronic order processing (Number of electronic orders) Line item picking (Number of line items picked) Other organization-sustaining costs (None) Total Cost $ 400,000 $ 280,000 $ 150,000 $ 450,000 $ 300,000 Total AC 8,000 delit 5,000 manua 15,000 elect 375,000 line 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 Number of deliveries Number of manual orders Number of electronic orders Number of line items picked Activity Hospital A Hospital B 10 25 0 30 15 0 120 250 How much total activity cost should be assigned to Hospital B for internal management purposes? Multiple Choice $3,340 $3,230 $3,030 $3,140 Assume that company makes only two products: Product A and Product B. The company's activity-based costing system has allocated $60,000 to an activity called machine setups. It is considering allocating the machine setups cost to its products using either the number of setups or setup hours as the activity measure. It gathered the following data with respect to these two potential activity measures: Number of machine setups Number of setup hours per setup Product A Product B 30 45 6 6 If the company uses number of machine setups as the activity measure, how much machine setup activity cost would be allocated to Product B? Multiple Choice $28,000 $36,000 $24,000 $38,000
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