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Chapter 7a Solutions to Cornerstone Exercises

# Chapter 7a Solutions to Cornerstone Exercises - Gold...

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CHAPTER 7A ACTIVITY-BASED COSTING AND MANAGEMENT Cornerstone Exercise 7–29 1. Activity Driver Cowboy Cowgirl Cutting hours 0.35 a 0.65 a Assembly hours 0.40 b 0.60 b Inspection hours 0.30 c 0.70 c Rework hours 0.25 d 0.75 d a 4,000 1,400 ; 4,000 2,600 b 2,500 1,000 ; 2,500 1,500 c 1,500 450 ; 1,500 1,050 d 200 50 ; 200 150 2. There is evidence of product diversity but it is not strong. The consumption ratios vary from 0.25 to 0.35, revealing that the cowboy boots vary in their consumption of the activities. However, the range is narrow and so the diversity is not great. Cornerstone Exercise 7–30 Cutting: 4,000 \$60,000 = \$15.00 per cutting hour Assembling: \$25,000 2,500 = \$10.00 per assembly hour Inspecting: \$12,000 1,500 = \$8.00 per inspection hour Reworking: \$6,000 200 = \$30 per rework hour

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Cornerstone Exercise 7–31 Activity Classic
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Unformatted text preview: Gold Processing transactions \$0.15 × 5,000 \$ 750 \$0.15 × 3,000 \$ 450 Preparing statements \$0.90 × 5,000 4,500 \$0.90 × 3,000 2,700 Answering questions \$3.00 × 10,000 30,000 \$3.00 × 15,000 45,000 Providing ATMs \$1.20 × 20,000 24,000 \$1.20 × 6,000 7,200 Total cost \$59,250 \$55,350 ÷ 5,000 ÷ 20,000 Unit cost \$ 11.85 \$ 2.77 * *Rounded Cornerstone Exercise 7–32 Activity Cost Assignment Comparing source documents 0.25 × \$250,000 = \$62,500 Resolving discrepancies 0.45 × \$250,000 = \$112,500 Processing payment 0.30 × \$250,000 = \$75,000 Cornerstone Exercise 7–33 Order filling rate = \$484,800 + \$323,200 808 orders = \$1,000 per order Selling call rate = \$240,000 + \$160,000 200 = \$2,000 per sales call...
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