Question
Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to
Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:
| 1 | Activity | Budgeted Activity Cost |
| 2 | Production | $500,000.00 |
| 3 | Setup | 144,000.00 |
| 4 | Inspection | 44,000.00 |
| 5 | Shipping | 115,000.00 |
| 6 | Customer service | 84,000.00 |
| 7 | Total | $887,000.00 |
The activity bases identified for each activity are as follows:
| Activity | Activity Base |
|---|---|
| Production | Machine hours |
| Setup | Number of setups |
| Inspection | Number of inspections |
| Shipping | Number of customer orders |
| Customer service | Number of customer service requests |
The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:
| Machine | Number of | Number of | Number of | Customer Service | ||
| Hours | Setups | Inspections | Customer Orders | Requests | Units | |
| White sugar | 5,000 | 85 | 220 | 1,150 | 60 | 10,000 |
| Brown sugar | 2,500 | 170 | 330 | 2,600 | 350 | 5,000 |
| Powdered sugar | 2,500 | 195 | 550 | 2,000 | 190 | 5,000 |
| Total | 10,000 | 450 | 1,100 | 5,750 | 600 | 20,000 |
Each product requires 0.5 machine hour per unit.
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| Complete the Activity Table for White sugar.
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| * If required, round all per-unit amounts to the nearest cent. | ||||||
| White sugar | ||||||
| Activity | Activity- | |||||
| Base | Activity | Activity | ||||
| Usage | X | Rate | = | Cost | ||
| Production |
insp. hours |
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| Setup |
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| Inspection |
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| Shipping |
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| Customer service |
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| Total activity cost |
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| Units |
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| Activity cost per unit |
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| Complete the Activity Table for Brown sugar.
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| Brown sugar | ||||||||||
| Activity | Activity- | |||||||||
| Base | Activity | Activity | ||||||||
| Usage | X | Rate | = | Cost | ||||||
| Production |
insp. hours |
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| Setup |
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| Inspection |
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| Shipping |
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| Customer service |
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| Total activity cost |
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| Units |
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| Activity cost per unit |
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| Complete the Activity Table for Powdered sugar.
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| Powdered sugar | ||||||||||
| Activity | Activity- | |||||||||
| Base | Activity | Activity | ||||||||
| Usage | X | Rate | = | Cost | ||||||
| Production |
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| Setup |
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| Inspection |
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| Shipping |
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| Customer service |
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| Total activity cost |
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| Units |
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| Activity cost per unit | ||||||||||
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IT Audit Control And Security
Authors: Robert R. Moeller
1st Edition
0471406767, 9780471406761
