The four general categories of ABC activities are unit, batsh, product line, and facility support, The first step in implementing an AgC overhesd rystem is to do a detailed study of the production process to determine exactly what activities cause overhead costs, In what general cont category should "electricity and ocher energy coits" be included? Unit: Productine Faclity support Batch The four general categories of ABC activities ate unit, batch, product line, and facility nopport. The first step in implementingr an. ABC onvihead instem is to do a detalled Unit Facility support Batch Product line Magkie's Moton manufactures boat motors, Magkie is shifting from a traditional costing system to an activify-based costing syntem. She has started by idenkifying four overhead cost activities, Listed below is the table that Maggie created identifying the cost activities and the percentage of time spent on each activity by rarious factory eaployers. Magrie also gathered the total overhead cost associated with each factory employee, which is shawn belown: Uing the information above, compuce the amount of the cost pool associated with ordering parts $85.000 $66,500 360,500 $69,750 Ferron has a total of $1,000,000 in manufacturing overbead costs. Of this amount, $700,000 is directly related to the number of product batches produced during the year. The for facility support (joroperty taxes, security costs, general administration, etc) and doesn't not vary at all with the level of activity. What would total company NET iNCOME be If the Product z line were dropped? Assume that Ferron has no other costs or expenses except those described here. Profit of $30,000 Profit of $180,000 Loss of $120,000 Loss of $270,000 Dallard Compary is implementing an activity based costing (ABC) systen. Under such a system, how are facility aupont costs frrated? As direct labor costs that are assigned to specific products As common costs that are not assigned to any specific product As advertising costs that are exduded from the computation of gross operating profit As difect materials costs that are assigned to specific products The following information is available for Dahota Company: Dakota Campany has decided to allocate its manufacturing overthead cost using activity-based costing. It is determined that 5200,000 of manufactaring overhead is for facility support costs and therefore will not be used in computing gross margin for the individual products. The remaining $1,000,000 in manufacturing overhead will be allocated based on batch-level and product line manufacturing as follows: What is Dakota Company's gross margin for Product / using ACTIVTY-BASED cOSTING? $400,000 $520.000 $450,000 $370.000
