Exercise 8-8 Activity measures

Activity Examples of
Activity measures Activity measures
a) Direct labor workers assemble&product unit-level number of DL hours
b) Products are designed by engineers Product-level number of product designed
c) Equipment is setup Batch-level number of setup
d) Machine are used to shaped cut materials unit-level number of machine hours
e) Monthly bills are sent out to regular customer customer-level number of bills
f) Materials are moved from the receiving dock
to production lines Batch-level numbers of batch
g) All completed units are inspected for defects unit-level number of inspected unit

Exercise 8-9 Computing ABC Product Costs

i. Machine setup = $72,000

400
= 180/Setup
ii. Special processing = $200,000
5,000
= 40/machine hours
iii. General factory = $816,000
24,000

Exercise 8-10 First Stage Allocation

 Opening Processing Processing other Other activity Total
Account Deposit customer
Teller 5%x160,000=8, 65%x16,000=10 20%x160,000=3 10%x160,000=1 160,0
wages 000 4,000 2,000 6,000 00
Assistant 15%x75,000=11 5%x75,000=375 30%x75,000=22, 50%x75,000=37, 75,00
branch ,250 0 500 500 0
managem
ent
Branch 5%x80,000=4,0 10%x80,000=8,0 85%x80,000=68, 80,00
manager 00 00 000 0
_
salary
Total 23,250 107,750 65,000 121,500 315,0
00

Exercise 8-11 Computing and Interpreting Activity Rates

Activity cost pools Total cost Total activity Activity rate

(a/b)
Opening account 23,250 500 $46.5/new account
Process deposit and 107,750 100,000 $1.08/process
withdrawals
Processing other 62,500 5,000 $12.5/other process
customer transaction