OFC Company of Kansas City prints business forms and other specialty paper products, such as writing paper, envelopes, note cards, and greeting cards. Its Business Services division offers inventory management services and desktop delivery on request. The division uses an activity-based costing (ABC) system. The budgeted usage of each activity cost driver and cost-driver rates for January 2019 for the Business Services division are:
Required information [The following information applies to the questions displayed below. _i OFC Company of Kansas City prints business forms and other specialty paper products, such as writing paper, envelopes, note cards, and greeting cards. Its Business Services division offers inventory management services and desktop delivery on request. The division uses an activity-based costing (ABC) system. The budgeted usage of each activity cost driver and cost-driver rates for January 2019 for the Business Services division are: Budgeted Activity Cost Driver Activity CostDriver Rate Storage Cartons in inventory 566,666 $ 6.6526 [carton/month Requisition handling Requisitions 62,666 16.56 Pick packing Lines 886,666 1.59 Data entry Lines 886,666 6.82 Requisitions 16,666 1.36 Desktop delivery Per delivery 26,666 43.66 i For the month, the division expects to make 11,500 deliveries to deliver 1.150.000 cartons to customers. OFC Company has decided to implement a kaizen (continuous-improvement) program to enhance operational efciency. After a careful study. management and employees agree that the rm will be able to reduce cost rates for batch-level activities by 2% and unit-level activities (other than Storage) by 1% per month during the first year of the program starting February 2019. The rm has decided to delay the implementation ofthe program for customer-sustaining and facility-level activities until 2020. The rm expects the amount of cost-driver usage in each ofthe next two months to be the same as those in January. Required: 1. Identify unit-level and batch-level activities. 2. What are the total budgeted costs for each activity and for the division as a whole in February and March? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Identify unitelevel and batchelevel activities. Sit) rage Pick packing Data entryiLines RequiSItion handling Data entryiRequisiiions Desktop delivery Required 2 ) Complete this question by entering your answers in the tabs below. Required 1 Required 2 What are the total budgeted costs for each activity and for the division as a whole in February and March? (Do not round intermediate calculations.) Storage Requisition handling Pick packing Data entryLines Data entryRequisitions Desktop delivery Divisional totals
