steps for implementing activity-based costing. The Other cost pool has no activity measure because it is an organization-sustaining activity. Study with Quizlet and memorize flashcards containing terms like activity-based costing, Activity. Designed to provide managers with cost info for decisions that affect capacity + fixed costs. Activity Based Costing (ABC) - Costing method based on activities. Cost of carrying out can be assigned to products that cause activities. Several rates would be utilized to allocate overhead to the products under this approach. Event that causes consumption of overhead resources in firm. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. Activity-Based Costing (ABC) is a method that aims to assign overhead to production in a more accurate manner than the traditional methods of assigning overhead. identifying customer wants and expectations. developing activity-based costing information for each activity. The company is implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. -charting company activities for completing a product. SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. (Be sure to round your potential adjustment in the number of employees to a whole number.) Accordingly, this is a time-consuming task because of the extensive data collection from each area of the activity cost pool. It requires data from different departments of production, or areas of manufacturing. (Do not round your answer to a whole number.)Ĭalculate the impact on expenses of matching capacity with demand. In activity-based costing, the activity cost pools and activity measures should be identified. The following additional information is available for the company as a whole and for Products Y and Z:Īctivity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity Machining Machine-hours $ 200, 000 10, 000 MHs Machine setups Number of setups $ 100, 000 200 setups Product design Number of products $ 84, 000 2 products General factory Direct labor-hours $ 300, 000 12, 000 DLHs \beginĪctivity demands for all jobs Requisition Processing 7, 000 Bid Evaluation 9, 400 Inspection 10, 000 Ĭalculate Saratoga's used capacity in minutes.Ĭalculate Saratoga's unused capacity in minutes.Ĭalculate Saratoga's unused capacity in number of employees. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. It is considering implementing an activity-based costing (ABC) system that allocates all $684,000 of its manufacturing overhead to four cost pools. The company is implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. Quizlet using a set of Prezi or PowerPoint slides or other applications such. The company uses a plantwide overhead rate based on direct labor-hours. Hickory Company manufactures two products-14,000 units of Product Y and 6,000 units of Product Z.
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