Question
The following data regarding the activity-based costing system at the Company Co. is available: Activity Pool Base Budgeted Activity Budgeted Cost Machine set up #
The following data regarding the activity-based costing system at the Company Co. is available:
Activity Pool | Base
| Budgeted Activity | Budgeted Cost |
Machine set up | # of setups | 2867 | $26651 |
Orders | # of orders | 924 | $80603 |
Shipping | Hours of shipping time | 2081 | $40657 |
In addition, prior to adopting an activity based costing system, Company Co. applied overhead based on direct labour hours. The budgeted total labour hours for the year was 50450. If one job required 427 direct labour hours, 41 setups, 47 orders, and 23 hours of shipping time what is the difference between the overhead assigned using the traditional method and ABC?
Select one:
a. $3211
b. $3679
c. $1252
d. $4930
Which of the following statements about activity based costing is not correct?
Select one:
a. Activity based costing is good to use when products differ in age.
b. Activity based costing is efficient to implement when there is not a large difference in volumes of each product produced.
c. A disadvantage of activity based costing is the cost needed to implement the system
d. An advantage of activity based costing is the increased accuracy in pricing.
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