Part 1 A Foster Florist specializes in large floral bouquets for hotels and othe
ID: 2549567 • Letter: P
Question
Part 1 A
Foster Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs and its activity-based costing system:
Distribution of resource consumption:
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
The amount of activity for the year is as follows:
What would be the total overhead cost per bouquet according to the activity-based costing system? In other words, what would be the overall activity rate for the making bouquets activity cost pool? (Round to the nearest whole cent.)
Multiple Choice
$1.73
$1.79
$2.10
$1.35
Part 1B
The Puyer Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available:
All of these expenses (except depreciation) are paid in cash in the month they are incurred.
If the company has budgeted to sell 17,000 Debs in March, then the average budgeted selling and administrative expenses per unit sold for March is closest to:
Multiple Choice
$2.50 per unit
$17.00 per unit
$12.50 per unit
$10.00 per unit
Part 1C
Standahl Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $39,590 per month plus $2,649 per flight plus $4 per passenger. The company expected its activity in August to be 82 flights and 294 passengers, but the actual activity was 85 flights and 297 passengers. The actual cost for plane operating costs in August was $255,690.
The spending variance for plane operating costs in August would be closest to:
Multiple Choice
$2,294 F
$10,253 U
$2,294 U
$10,253 F
Part 1D
Foster Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs and its activity-based costing system:
Distribution of resource consumption:
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
The amount of activity for the year is as follows:
What would be the total overhead cost per delivery according to the activity-based costing system? In other words, what would be the overall activity rate for the deliveries activity cost pool? (Round to the nearest whole cent.)
Multiple Choice
$26.50
$30.00
$24.00
$27.00
Overhead costs: Wages and salaries $ 70,000 Other expenses 50,000 Total $ 120,000Explanation / Answer
Answer 1A. $1.79 Amount % allocable to making Bouquets Overhead Cost to making Bouquets Wages & Salaries 70,000.00 70% 49,000.00 Other Expenses 50,000.00 45% 22,500.00 Total 71,500.00 No. of Bouquets 40,000 Overhead Cost per Bouquet 1.79 Answer 1B. $12.50 per unit Total Fixed Cost 170,000.00 No. of Units Sold 17,000.00 Fixed Cost per Unit 10.00 Variable Cost per Unit 2.50 Total Cost per Unit 12.50 Answer 1C. $10,253 (F) Spending Variance = Flexible Budget - Actual Results Flexible Ccost - Operating Costs = $39,590 + ($2,649 X 85 Flights) + ($4 X 297 Passengers) Flexible Ccost - Operating Costs = $265,943 Spending Variance = $265,943 - $255,690 Spending Variance = $10,253 (F) Answer 1D. $26.50 Amount % allocable to making Delivery Overhead Cost to making Delivery Wages & Salaries 70,000.00 20% 14,000.00 Other Expenses 50,000.00 25% 12,500.00 Total 26,500.00 No. of Deliveries 1,000 Overhead Cost per Delivery 26.50