Columbus Company provides the following ABC costing information: ...

[MGLQZ]

Question 1

Activity-based costing is most likely to yield benefits for companies ________.
◦ with complex product design processes that vary significantly from product to product
◦ with operations that remain fairly consistent  across product lines
◦ in a monopolistic market
◦ having nominal percentage of indirect costs

Question 2

Columbus Company provides the following ABC costing information:

Activities

Total Costs

Activity-cost drivers

Labor

$392,000

8,000

hours

Gas

$30,000

5,000

gallons

Invoices

$180,000

7,500

invoices

Total costs

$602,000

The above activities used by their three departments are:

Lawn Department

Bush Department

Plowing

Department

Labor

2,600

hours

1,300

hours

4,100 hours

Gas

1,800

gallons

1,000

gallons

2,200 gallons

Invoices

1,600

invoices

100

invoices

5,800 invoices

How much of the labor cost will be assigned to the Bush Department?
◦ $127,400
◦ $63,700
◦ $200,900
◦ $97,825

[amynguyen1221]

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