LUpletes the statement or answers the question. 1) Skyline Florists uses an acti
ID: 2511935 • Letter: L
Question
LUpletes the statement or answers the question. 1) Skyline Florists uses an activity-based costing system to compute the cost of n bouquets and delivering the bouquets to its commercial customers. Company personnel w S180,000 typically perform both tasks; other firm-wide overhead is expected to total $70, These costs are allocated as follows: Bouquet Production 60 % 50% Delivery 30 % 35 % Other 10% 15% Wages and salaries Other overhead Skyline anticipates making 20,000 bouquets and 4,000 deliveries in the upcoming year The cost of wages and salaries and other overhead that would be charged to each delivery closest to: A) $40.63 B) $20.31 C) $26.75 D) $19.63, E) None of the answers is correct. 2) Motor Mike builds recreational motor homes. All of the following activities add value to 2) the finished product except: A) addition of exterior lights. B) installation of carpet. C) assembly of the frame to the chassis. D) storage of the vehicle in the sales area. E) final painting and polishing. 3) Which of the following cost drivers would best be associated with the activity of 3) physician time in a medical clinic? A) The number of accreditations held by the clinic. B) Number of continuing patient visits. C) Number of new patient visits. D) Number of line items on the clinic's bill. E) Physician minutes with a patient.Explanation / Answer
Problem 1 – Skyline
Solution:
The correct option is D) $19.63
We need to do first stage allocation of overhead costs to Bouquet and Delivery.
Total Overhead
Bouquet Production
Delivery
Other
Wages and Salaries
$180,000
108000
(180,000*60%)
54000
(180,000*60%)
18000
(180,000*10%)
Other Overheads
$70,000
35000
(70,000*50%)
24500
(70,000*35%)
10500
(70,000*15%)
TOTAL ASSIGNED OVERHEAD TO ACTIVITY COST POOL (A)
$143,000
$78,500
$28,500
Number of Activity (B)
20,000 Bouquets
4,000 Deliveries
Rate per Activity (A/B)
$7.15 per bouquet
($143,000 / 20,000)
$19.63 per delivery
($78,500 / 4,000)
Hence, the Wages and Salaries and other overhead that would be charged to each delivery closest to $19.63
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Pls ask separate question for remaining parts.
Total Overhead
Bouquet Production
Delivery
Other
Wages and Salaries
$180,000
108000
(180,000*60%)
54000
(180,000*60%)
18000
(180,000*10%)
Other Overheads
$70,000
35000
(70,000*50%)
24500
(70,000*35%)
10500
(70,000*15%)
TOTAL ASSIGNED OVERHEAD TO ACTIVITY COST POOL (A)
$143,000
$78,500
$28,500
Number of Activity (B)
20,000 Bouquets
4,000 Deliveries
Rate per Activity (A/B)
$7.15 per bouquet
($143,000 / 20,000)
$19.63 per delivery
($78,500 / 4,000)
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