Each . Setting up machines, Machining and .Inspecting are examples activity cost pool, whereas machine hours are used as an allocation base for cost pool. This will be used to assign . c. number of inspections. An example of a cost which would not be assigned to an overhead cost pool is. Expert Answer. Step 1: identify cost pool. Example of activity-based costing. d. machine hours. Each . Which of the following is not an example of an activity cost pool? This problem has been solved! An activity cost pool is an account in which is aggregated a number of costs that are related to a certain type of activity. Example of activity-based costing. Who are the experts? Estimated costs for activity cost pools and other item(s) are as follows: Machining $800,000 14. For instance, if you allocated £10,000 to the manufacturing cost pool, and 5,000 units were produced in that period, the activity rate would be: Identify various activity cost pools through several examples, noting . Take the Ford plant for example. For its inspecting cost pool, Davidson, Inc. expected overhead cost of $300,000 and 4,000 inspections. The actual overhead cost for that cost pool was $360,000 for 5,000 inspections. Estimated costs for activity cost pools and other item(s) are as follows: Machining $500,000 Assembling 200,000 Advertising 450,000 Inspecting and testing 175,000 Total estimated overhead is b. Accounting. Step-by-step . b. setting up machines e number of inspections. A cost pool is a grouping of individual costs, typically by department or service center. depreciation. The activity rate for that cost pool was: a) $63 per part type b) $76 per part type c) $70 per part type d) $84 per part type 9. An example of an activity cost pool is b. setting up machines. Compute activity rates for the activity cost pools. b. setting up machines. d. machine hours. $875,000. Activity-based costing formula examples. The activity-based formula simply gives us the dollar value of amount per activity which is then can be multiplied to determine the cost of the total products assigned or produced in that particular cost pool. An example of an activity cost pool is a. machine hours. The actual overhead cost for that cost pool was $360,000 for 5,000 inspections. c. assigns activity cost pools to products and services, then allocates overhead back to the activity cost pools. Step-by-step . An example of an activity cost pool is a. machine hours. Cost pools are commonly used for the allocation of factory . This problem has been solved! Cost Pool: This is an item for which measurement of the cost would require, e.g., a product; Cost Driver: It is a factor that will cause a change in the cost of that activity. cost driver is any factor which causes a . In other words, it's a way to record the cumulative costs of a group of similar activities.Even though the cost pool account is similar to the factory overhead account it actually contains both fixed and variable costs. Definition: An activity cost pool is a temporary account that is used to total the costs incurred for a specific group of activities. An example of a cost which would not be assigned to an overhead cost pool is freight-out. b. setting up machines. This will be used to assign . An example of an activity cost pool is a number of setups. c. number of setups. An example of an activity cost pool is a. number of setups. A temporary account, an activity cost pool, includes fixed costs and variable costs . Based on our ABC system formula (Activity-based costing = Cost pool total / Cost driver), the following are examples of how to calculate activity-based costing: ABC system example 1. d. supplies. Activity cost pools are groups of costs that are influenced by a common cost driver, determining how much each cost occurs. Examples of cost drivers include units, labor or machine hours, and parts. An example of an activity cost pool is a. number of setups. Ferris Corporation makes a single product - a fire resistant commercial filing cabinet . The cost driver can be anything in the pool that causes the cost of the activities to increase or decrease. See the answer See the answer done loading. Vex Corporation manufactures a variety of products. Question 4 An example of an activity cost pool is machine hours setting up machines number of setups number of inspections OOOO. b. d. identify the cost driver that has a strong correlation to the activity cost pool. Question. b. setting up machines. Cost allocations are then made from the cost pool. In other words, it's a way to record the cumulative costs of a group of similar activities.Even though the cost pool account is similar to the factory overhead account it actually contains both fixed and variable costs. b. setting up machines. Product Packaging. An example of an activity cost driver in a manufacturing plant is the number of orders that must be produced. Everyday thousands of cars are ordered into the production line by management. What does cost driver mean? Step 1: identify cost pool. Expert Answer. c. number of inspections. check_circle Expert Answer. c. number of inspections. Based on example cost pools already identify, but in real life, we need to define base on the actual situation. A cost driver is something that controls changes in the cost of an activity. As an example to calculate the per unit cost for the purchasing department, the total costs of the purchasing department are divided by the number of purchase orders. For example, the cost of the maintenance department is accumulated in a cost pool and then allocated to those departments using its services. b. setting up machines. Setting up machines, Machining and .Inspecting are examples activity cost pool, whereas machine hours are used as an allocation base for cost pool. fullscreen Expand. Activity Based Cost Management Making The ABC calculation is as follows: Identify all the activities required to create the product. Examples include rent payable, utilities payable, insurance payable, salaries payable to . The activity-based overhead rate used to assign the costs of the inspecting cost pool to products is. Construct a table showing the overhead costs of units and four orders. An activity-based costing rate is calculated by assigning indirect costs to a cost pool, adding the costs included in that cost pool together, then dividing the cost pool total by the cost driver . Acces PDF Activity Based Costing Answers Mcgraw Hill Connect Activity Based Costing Answers Mcgraw Hill Connect Activity Based Costing (with full-length example) Managerial Accoun a. machine hours. b. setting up machines. Freight-out. See the answer. Rental. b. compute the activity-based overhead rate per cost driver. In the past, Vex had been using a traditional overhead allocation system based on$10.40 per machine hours. Experts are tested by Chegg as specialists in their subject area. Step 2: Identify the cost driver. cost pool. Based on example cost pools already identify, but in real life, we need to define base on the actual situation. An example of an activity cost pool is. Solution: ($500,000 + $200,000 + $175,000) = $875,000 55. A company's labor hours directly affect their electric bill, which totaled $50,000 this year. Accounting questions and answers. Definition: An activity cost pool is a temporary account that is used to total the costs incurred for a specific group of activities. Cost Pool: This is an item for which measurement of the cost would require, e.g., a product; Cost Driver: It is a factor that will cause a change in the cost of that activity. A cost driver is something that controls changes in the cost of an activity. d. supplies. Experts are tested by Chegg as specialists in their subject area. d. machine hours. Calculate the cost . a) dividing the total overhead cost in the the activity cost pool by the activity cost pool's activity rate. There are two kinds of cost driver: 1) Resource Cost Driver: It is a measure of the number of resources that shall be consumed by an activity. Cost pools represent the indirect costs from each activity that affects the activity-based costing process. The list consists of descriptions of a variety of activities, including a . setting up machines. Identify various activity cost pools through several examples, noting . Examples of cost drivers include units, labor or machine hours, and parts. A per unit cost is calculated by dividing the total dollars in each activity cost pool by the number of units of the activity cost drivers. indirect salaries. An example of a cost which would not be assigned to an overhead cost pool is a. depreciation. Assign cost drivers (you can have more than one) to each cost pool. Setting up machines. machine hours. An activity cost pool is an aggregate of all the costs associated with performing a particular business task. Take the Ford plant for example. Once you allocate the amount of overhead used for each cost pool, you can calculate the 'activity rate', which is calculated by dividing the cost associated with the cost pool by the measurement. Activity Based Costing Example / Problem / Format. A per unit cost is calculated by dividing the total dollars in each activity cost pool by the number of units of the activity cost drivers. Activity-based costing is a cost accounting system that allocates manufacturing costs based on production activities. cost for that cost pool was $380,000 and the expected activity was 5,000 part types. Based on our ABC system formula (Activity-based costing = Cost pool total / Cost driver), the following are examples of how to calculate activity-based costing: ABC system example 1. Ordering materials, setting up machines, assembling products, and inspecting products are examples of . A cost driver is the unit of an activity that causes the change in activity's cost. The cost pools are: Machine Set Up. d. allocates overhead directly to products and services based on activity levels. Machine setup cost will drive by a number of set up time. 53. See the answer. Activity cost pools are groups of costs that are influenced by a common cost driver, determining how much each cost occurs. 53. c. number of setups. b. freight-out. Transcribed Image Text. c. indirect salaries. $60 per inspection. b. setting up machines. c. number of setups. Everyday thousands of cars are ordered into the production line by management. d. number of inspections. The cost pools are: Machine Set Up. For example, the cost of the maintenance department is accumulated in a cost pool and then allocated to those departments using its services. A company's labor hours directly affect their electric bill, which totaled $50,000 this year. b. accumulates overhead in one cost pool, then assigns the overhead to products and services by means of a cost driver. 54. A temporary account, an activity cost pool, includes fixed costs and variable costs . d. machine hours. An example of an activity cost pool is a. number of setups. d. number of inspections. 54. When you divide the total overhead in a cost pool by your total cost drivers, you get a cost driver rate. a. star. Activity-based costing formula examples. a. The actual overhead cost for the cost pool was $420,000 at an actual activity of 6,000 part types. Example. Three different types of cost pools are most common in this system: overhead, indirect materials, and indirect labor. Step 2: Identify the cost driver. freight-out. Example. The cost driver can be anything in the pool that causes the cost of the activities to increase or decrease. Which of the following is not an example of an activity cost pool? An activity-based costing rate is calculated by assigning indirect costs to a cost pool, adding the costs included in that cost pool together, then dividing the cost pool total by the cost driver . Activity Dictionary: A list of particular activities that are utilized in activity-based costing (ABC) analysis. Assign cost drivers (you can have more than one) to each cost pool. An example of an activity cost pool is. An example of a cost which would not be assigned to an overhead cost pool is a. depreciation. Product Packaging. Activity-based costing serves and complements many other analyses and measures, including target costing, product costing, product line profitability analysis, service pricing, and more. An example of an activity cost driver in a manufacturing plant is the number of orders that must be produced. Business. Rental. Assign each cost pool activity cost drivers, such as hours or units. cost driver for each activity cost pool, expected use of cost drivers per activity . Perform the first stage allocation of overhead costs to the activity cost pools. There are two kinds of cost driver: 1) Resource Cost Driver: It is a measure of the number of resources that shall be consumed by an activity. An example of an activity cost pool is number of inspections. b. Overhead Rate = $8 per working hour Explanation. Who are the experts? An activity cost pool is an aggregate of all the costs associated with performing a particular business task. When you divide the total overhead in a cost pool by your total cost drivers, you get a cost driver rate. Thus, it is used to better understand the company's true costs, and thereby formulate an appropriate pricing strategy to mitigate unnecessary expenses. $60 per inspection. supplies. c. identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools. d. number of inspections. Cost allocations are then made from the cost pool. number of setups. The grand total of these costs is then allocated to products and other cost objects in order to gain a better understanding of the total costs incurred by a product or cost object. To create a cost pool for the costing strategy, first, the businesses need to identify the amount of overhead Overhead Overhead cost are those cost that is not related directly on the production activity and are therefore considered as indirect costs that have to be paid even if there is no production. For its inspecting cost pool, Davidson, Inc. expected overhead cost of $300,000 and 4,000 inspections. Machine setup cost will drive by a number of set up time. As an example to calculate the per unit cost for the purchasing department, the total costs of the purchasing department are divided by the number of purchase orders. b. c. indirect salaries. Overhead Rate = 40,000 / 5,000. Divide the activities into cost pools, which includes all the individual costs related to an activity—such as. See the answer See the answer done loading. The activity-based overhead rate used to assign the costs of the inspecting cost pool to products is. b. freight-out. 53.

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