Question 1
Maxx Inc. has provided the following data from its activity-based costing system:
Activity Cost Pools Total Cost Total Activity
Designing products $389,400 6,490 product design hours
Setting up batches $52,678 7366 batch set-ups
Assembling products $25,122 4,018 assembly hours
The activity rate for the "designing products" activity cost pool is:
Question 2
Sasha Company allocates the estimated $183,900 of its accounting department costs to its production and sales departments since the accounting department supports the other two departments particularly with regard to payroll and accounts payable functions. The costs will be allocated based on the number of employees using the direct method. Information regarding costs and employees follows:
|
Department
|
Employees
|
|
Accounting
|
4
|
|
Production
|
33
|
|
Sales
|
10
|
How much of the accounting department costs will be allocated to the production?
Question 3
Medusa Company allocates costs from the payroll department (S1) and the maintenance department (S2) to the molding (P1), finishing (P2), and packaging (P3) departments. Payroll department costs are allocated based on the number of employees in the department and maintenance department costs are allocated based on the number of square feet which the production department occupies within the factory. Information about the departments is presented below:
|
|
|
Number of
|
Number of Square
|
|
Department
|
Costs
|
Employees
|
Feet Occupied
|
|
Payroll (S1)
|
$148,000
|
2
|
2,000
|
|
Maintenance (S2)
|
$220,000
|
8
|
64,000
|
|
Molding (P1)
|
|
65
|
100,000
|
|
Finishing (P2)
|
|
46
|
60,000
|
|
Packaging (P3)
|
|
23
|
40,000
|
Medusa uses the direct method to allocate costs. Round all answers to the nearest dollar.
What amount of the payroll department costs will be allocated to the molding department?
Question 4
The Manassas Company has 55 obsolete keyboards that are carried in inventory at a cost of $9,600. If these keyboards are upgraded at a cost of $6,500, they could be sold for $18,400. Alternatively, the keyboards could be sold "as is" for $7,400. What is the net advantage or disadvantage of re-working the keyboards?