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Problem 1 5 - 4 7 ( Algo ) ABC Data; Resource Capacity Planning; Nonfinancial Performance Indicators [ LO 1 5 - 5 , 1
Problem Algo ABC Data; Resource Capacity Planning; Nonfinancial Performance Indicators LO
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Zenon Computer competes at the retail level on the basis of customer service. It has invested significant resources in its customer service department. Recently, the company has installed a traditional activitybased costing ABC system to provide better cost information for pricing, decision making, and customer profitability analysis. Most of the costs of running the customer service department are considered committed ie shortterm fixed costs principally personnel and equipment costs The budgeted cost for the upcoming period is $ Activity analysis, recently conducted when the ABC system was implemented, revealed the following information:
tableActivitiestablePercentageof Employee TimetableEstimated Budgeted Cost DriverQuantityHandling customer orders, customer ordersProcessing customer complaints, customer complaintsConducting customer credit checks, credit checks
Part Algo
Required:
Based on the preceding information, calculate the activity cost driver ABC rates for each of the three activities performed by the customer service department. Assume that during the period, actual cost driver activity levels are exactly as planned. Under this situation, what is the total cost allocated to each of the three activities?
Suppose that during the upcoming period, activities ie costdriver quantities are exactly as budgeted. Suppose, too, that the practical capacity level for each of these activities is customer orders, customer complaints, and credit checks. Using costdriver rates based on the practical capacity level for each activity: a What is the cost assigned to each of the three activities? b What is the unused capacity for each activity? c What is the cost of unused capacity for each activity?
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