Review Quiz Solution for Chapter 4

# Review Quiz Solution for Chapter 4 - Quiz Chapter 4...

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Page 1 Quiz – Chapter 4 - Solutions 1. Jennifer Company has two products: A and B. The company uses Activity-Based Costing. The estimated total cost and expected activity for each of the company's three activity cost pools are as follows: Estimated Expected Activity Activity Cost Pool Cost Product A Product B Total Activity 1 ................ \$23,500 400 100 500 Activity 2 ................ \$18,000 500 200 700 Activity 3 ................ \$34,600 600 300 900 The activity rate under the Activity-Based Costing system for Activity 3 is closest to: A) \$36.24. B) \$38.44. C) \$84.56. D) \$115.33. The correct answer is B. To calculate the activity rate for activity 3, you would divide: Estimated Cost / Estimated Driver \$34,600 / 900 \$38.44 2. Reach Consulting Corporation has its headquarters in Chicago and operates from three branch offices in Portland, Dallas, and Miami. Reach's headquarter activities are assigned to two activity cost pools: General Service and Research Service. These costs are then allocated to the three branch offices. Information for next year related to this Activity-Based Costing system is as follows: Activity Cost Pool Activity Measure Estimated Overhead Cost General service ......... % of time devoted to branch \$700,000 Research service ....... Computer time \$140,000 Estimated branch data for next year is as follows: % of time devoted to branch Computer Time Portland 30% 200,000 minutes Dallas 60% 150,000 minutes Miami 10% 50,000 minutes

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Page 2 How much of the headquarters cost allocation should Dallas expect to receive next year?
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