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Administrative building lease marketing department

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Administrative building lease Marketing Department Marketing wages and salaries Selling expenses Total Activity Cost Pools Factory equipment depreciation $3,500,000 Percent consumed by customer orders 20% $ 700,000 Production Department Indirect factory wages 6,000,000 $ Factory equipment depreciation 3,500,000 Factory utilities 2,500,000 Factory building lease 2,000,000 14,000,000 $ General Administrative Department Administrative wages and salaries 4,000,000 Office equipment depreciation 900,000 Administrative building lease 1,100,000 6,000,000 Marketing Department Marketing wages and salaries 1,500,000 Selling expenses 500,000 2,000,000 Total overhead costs 22,000,000 $ Overhead Costs at Baxter Battery (Manufacturing and Nonmanufacturing)
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7-16 Customer Orders Design changes Order Size Customer Relations Other Total Production Department Indirect factory wages 1,800,000 $ 1,800,000 $ 1,200,000 $ 600,000 $ 600,000 $ 6,000,000 $ Factory equipment depreciation 700,000 350,000 2,100,000 - 350,000 3,500,000 Factory utilities - 250,000 1,500,000 - 750,000 2,500,000 Factory building lease - - - - 2,000,000 2,000,000 General Administrative Department Administrative wages and salaries 1,200,000 400,000 400,000 1,200,000 800,000 4,000,000 Office equipment depreciation 270,000 90,000 - 180,000 360,000 900,000 Administrative building lease - - - - 1,100,000 1,100,000 Marketing Department Marketing wages and salaries 450,000 150,000 - 750,000 150,000 1,500,000 Selling expenses 100,000 - - 350,000 50,000 500,000 Total 4,520,000 $ 3,040,000 $ 5,200,000 $ 3,080,000 $ 6,160,000 $ 22,000,000 $ Activity Cost Pools   Assign Overhead Costs to     Activity Cost Pools
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7-17   Calculate Activity Rates The ABC team determines that Baxter Battery will  have these total activities for each activity cost pool: 10,000 customer orders, 4,000 design changes, 800,000 machine-hours, 2,000 customers served. Now the team can compute the individual activity rates by dividing the total cost for each activity by the total activity levels.
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7-18 (a) (b) (a) ÷ (b) Activity Cost Pools Total Cost Total Activity Activity Rate Customer orders 4,520,000 $ 10,000 orders $452 per order Design changes 3,040,000 4,000 changes $760 per change Order size 5,200,000 800,000 MHs $6.50 per MH Customer relations 3,080,000 2,000 customers $1,540 per customer Other 6,160,000 Not applicable Not applicable Total 22,000,000 $ Computation of Activity Rates   Calculate Activity Rates
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7-19 Traced Traced Traced Direct Materials Direct Labor Shipping Costs Overhead Costs Cost Objects: Products, Customer Orders, Customers Activity–Based Costing at Baxter  Battery
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7-20 Direct Materials Direct Labor Shipping Costs Cost Objects: Products, Customer Orders, Customers Overhead Costs First-Stage Allocation Customer Orders Order Size Customer Relations Other Design Changes Activity–Based Costing at Baxter  Battery
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7-21 Direct Materials Direct Labor Shipping Costs Cost Objects: Products, Customer Orders, Customers Customer Orders Order Size Customer Relations Other Overhead Costs First-Stage Allocation Second-Stage Allocations $/Order $/Change $/MH $/Customer Unallocated Design Changes Activity–Based Costing at Baxter  Battery
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7-22 Baxter Battery Information SureStart 1. Requires no new design resources.
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