Calculate the overhead cost per account

Assignment Help Managerial Accounting

Reference no: EM13165148

Question 1

Ritz Company sells fine collectible statues and has implemented activity-based costing. Costs in the shipping department have been divided into three cost pools. The first cost pool contains costs that are related to packaging and shipping and Rand has determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final inspection of each item before it is shipped and the cost driver for this pool is the number of individual items that are inspected and shipped. The final cost pool is used for general operations and supervision of the department and the cost driver is the number of shipments. Information about the department is summarized below:

Cost Pool	Total Costs	Cost Driver	Annual Activity
Packaging and shipping	$164,900	Number of boxes shipped	24,800 boxes
Final inspection	$199,800	Number of individual items shipped	99,100 items
General operations and supervision	$80,200	Number of orders	8,300 orders

During the period, the Far East sales office generated 652 orders for a total of 6,190 items. These orders were shipped in 1,365 boxes. What amount of shipping department costs should be allocated to these sales?

Question 2

Baller Financial is a banking services company that offers many different types of checking accounts. The bank has recently adopted an activity-based costing system to assign costs to their various types of checking accounts. The following data relate to the money market checking accounts, one of the popular checking accounts, and the ABC cost pools:

Annual number of accounts = 52,000 accounts Checking account cost pools:

Cost Pool	Cost	Cost Drivers
Returned check costs	$2,760,000	Number of returned checks
Checking account reconciliation costs	52,000	Number of account reconciliation requests
New account setup	644,000	Number of new accounts
Copies of cancelled checks	388,000	Number of cancelled check copy requests
Online banking web site maintenance	189,000	Per product group (type of account)

Annual activity information related to cost drivers:

Cost Pool	All Products	Money Market Checking
Returned check	200,000 returned checks	18,000
Check reconciliation costs	388,000 checking account	420
New accounts	60,000 new accounts	15,000
Cancelled check copy requests	100,000 cancelled check	60,000
Web site costs	2 types of accounts	1

Calculate the overhead cost per account for the Money Market Checking.

Question 2

Sosa Company has $39 per unit in variable costs and $1,900,000 per year in fixed costs.Demand is estimated to be 138,000 units annually. What is the price if a markup of 35% on total cost is used to determine the price?

Reference no: EM13165148

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