Question :
Use the information below to answer the following question(s).
A transportation : 1186283
Use the information below to answer the following question(s).
A transportation company provides bussing, limo and taxi service. The company charges: $350 per day for bussing service; $2.00 per kilometre for taxi service; and, $3.50 per kilometre for limo service. Two individual clients, the school board and the city government offices use the majority of the limo service on a contract agreement. Bussing services are used exclusively by the school board, and the taxi service is used almost exclusively by the general public, although the school board uses the taxi services when individual students have to be transported on occasion. Indirect costs are accumulated on internal records at $1.50 per kilometre for limo use and $1.00 per kilometre for taxi use, and $195 per day for each of the twenty buses.
The company’s costing system has tracked the following activities for the month:
Client
Limo Km
Taxi Km
Average
Days/Bus
School board
360
90
19
City gov’t
1,943
125
n/a
6) Compute the billing to each major client for the month.
A) School Board, $134,440.00; City Gov’t, $7,050.50
B) School Board, $8,090.00; City Gov’t, $134,440.00
C) School Board, $134,440.00; City Gov’t, $4,323.50
D) School Board, $7,050.50; City Gov’t, $7,685.00
E) School Board, $8,090.00; City Gov’t, $7,050.50
7) What indirect costs were accumulated for each major client for the month?
A) School Board, $74,730.00; City Gov’t, $3,039.50
B) School Board, $7,050.50; City Gov’t, $74,730.00
C) School Board, $74,730.00; City Gov’t, $7,050.50
D) School Board, $7,050,50; City Gov’t, $7,685.00
E) School Board, $6,925.50; City Gov’t, $141,420.00
8) The previous controller at the transportation company had always estimated the indirect costs at 25% of billings. What indirect costs were accumulated for each major client for the month under this assumption?
A) School Board, $33,610.00; City Gov’t, $1,080.88
B) School Board, $2,022.50; City Gov’t, $33,610.00
C) School Board, $33,610.00; City Gov’t, $1,762.63
D) School Board, $1,762.63; City Gov’t, $1,921.25
E) School Board, $2,022.50; City Gov’t, $1,762.63
Use the information below to answer the following question(s).
Fran Ferry Company had the following activities, pooled costs, and physical flow of driver units. The company uses activity-based costing.
Activities
Pooled
Costs
Physical Flow of
Driver Units
Account inquiry (hours)
$200,000
5,000 hours
Account billing (lines)
$140,000
2,000,000 lines
Account verification (accounts)
$5,000
20,000 accounts
Correspondence (letters)
$25,000
2,000 letters
The above activities are used by departments A and B as follows:
A
B
Account inquiry (hours)
1,000
2,000
Account billing (lines)
200,000
100,000
Account verification (accounts)
5,000
4,000
Correspondence (letters)
500
800
9) How much of the account inquiry cost will be assigned to Department A?
A) $200,000
B) $80,000
C) $66,667
D) $133,334
E) $40,000
10) How much of the account billing cost will be assigned to Department B?
A) $7,000
B) $14,000
C) $46,667
D) $93,333
E) $140,000
Use the information below to answer the following question(s).
Bill Cobb Corporation had the following activities, pooled costs, and physical flow of driver units. The company uses activity-based costing.
Activities
Pooled
Costs
Physical Flow of
Driver Units
Account inquiry (hours)
$400,000
5,000
Account billing (lines)
$280,000
2,000,000
Account verification (accounts)
$150,000
20,000
Correspondence (letters)
$50,000
2,000
The above activities are used by departments X and Y as follows:
X
Y
Account inquiry (hours)
500 hours
800 hours
Account billing (lines)
250,000 lines
200,000 lines
Account verification (accounts)
2,000 accounts
1,000 accounts
Correspondence (letters)
200 letters
1,000 letters
11) How much of the correspondence cost will be assigned to Department X?
A) $10,000
B) $8,333
C) $25,000
D) $5,000
E) $50,000
12) How much of the account verification cost will be assigned to Department Y?
A) $15,000
B) $7,500
C) $100,000
D) $10,000
E) $50,000
13) Using a department indirect cost rate to allocate costs to products will result in the same product costs as an ABC system if which of the following is true?
A) if each activity within a department has the same cost allocation base, and the different products use resources from different activity areas in the same proportion
B) if significant costs are incurred on different activities with different cost-allocation bases within a department, the different products use resources from different activity areas in different proportions
C) if no single activity accounts for a significant fraction of a department’s costs
D) if information needed for an ABC is too expensive to develop and maintain accurately
E) if each activity in a department has a separate costing system and uses different activity cost drivers
14) When calculating the total amount of manufacturing overhead to allocate to a particular job, the company would multiply each departmental overhead rate by ________ and then ________ together the allocated amounts from each department.
A) the actual amount of the departmental allocation base used by the job; add
B) the actual amount of the plant-wide allocation base used by the job; add
C) the actual amount of the departmental allocation base used by the job; multiply
D) the actual amount of the plant-wide allocation base used by the job; multiply
E) the actual amount of the activity allocation base used by the job; add
15) Babcock Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental overhead rate of $20 per machine hour, while the Sanding Department uses a departmental overhead rate of $15 per direct labour hour. Job 396 used the following direct labour hours and machine hours in the two departments:
Actual results
Assembly Department
Sanding Department
Direct labour hours used
4
3
Machine hours used
9
5
The cost for direct labour is $25 per direct labour hour and the cost of the direct materials used by Job 396 is $1,200.
What was the total cost of Job 396 if Babcock Industries used the departmental overhead rates to allocate manufacturing overhead?
A) $1,375
B) $1,425
C) $1,500
D) $1,600
E) $1,630
