The Stamford store of Gabriel'sCorner, a chain of small neighborhood conveniencestores, is preparing itsactivity-based budget for January 2018. Gabriel'sCorner has three productcategories: soft drinks(35% of cost of goods sold[COGS]), fresh produce(25% ofCOGS), and packaged food(40% ofCOGS). The following table shows the four activities that consume indirect resources at the Stamford store, the cost drivers and theirrates, and thecost-driver amount budgeted to be consumed by each activity in January 2018.

Read the requirements2.

Requirement 1. What is the total budgeted indirect cost at the Stamford store in January 2018? What is the total budgeted cost of each activity at the Stamford store for January 2018? What is the budgeted indirect cost of each product category for January 2018?

Complete the following table to determine the total budgeted indirectcost, total budgeted cost of eachactivity, and budgeted indirect cost of each product category for January 2018. (Round the percentages to the nearest hundredthpercent, X.XX%.)

Soft Fresh Packaged

Drinks Snacks Food Total

Ordering

Delivery

Shelf-stocking

Customer support

Total costs

Percentage of total indirect costs % % %

Requirement 2. Which product category has the largest fraction of total budgeted indirectcosts?

(1) consumes the largest fraction of total budgeted indirect costs.

Requirement 3. Given your answer in requirement2, what advantage does Gabriel'sCorner gain by using anactivity-based approach to budgetingover, say, allocating indirect costs to products based on cost of goodssold?

Anactivity-based approach recognizes how different products require (2) By recognizingthis, Gabriel'sCorner managers are better able to budget for (3) of individualproduct-line items sold.

1: Data Table

January 2018 January 2018 Budgeted

Budgeted Amount of Cost Driver Used

Cost-Driver Soft Fresh Packaged

Activity Cost Driver Rate Drinks Snacks Food

Ordering Number of purchase orders $88 14 25 14

Delivery Number of deliveries $75 13 62 24

Shelf-stocking Hours of stocking time $25.00 22 179 92

Customer support Number of items sold $0.23 4,600 34,300 10,900

2: Requirements

1. What is the total budgeted indirect cost at the Stamford store in January 2018? What is the total budgeted cost of each activity at the Stamford store for January 2018? What is the budgeted indirect cost of each product category for January 2018?
2. Which product category has the largest fraction of total budgeted indirectcosts?
3. Given your answer in requirement2, what advantage does Gabriel'sCorner gain by using anactivity-based approach to budgetingover, say, allocating indirect costs to products based on cost of goodssold?