Posted by Veronica on Sunday, July 15, 2012 at 3:29pm.
Problem 1  Aunt Ethel's Fancy Cookie Company manufactures and sells three flavors of cookies: macaroon, sugar, and buttercream. The batch size for the cookies is limited to 1,000 cookies based on the size of the ovens and cookie molds owned by the company. Based on budgetary projections, the information listed below is available:
Buttercream Macaroon Sugar
Projected sales in units 500,000 800,000 600,000
PER UNIT data:
Selling price $0.80 $0.75 $0.60
Direct materials $0.20 $0.15 $0.14
Direct labor $0.04 $0.02 $0.02
Hours per 1,000unit batch:
Direct labor hours 2 1 1
Oven hours 1 1 1
Packaging hours 0.5 0.5 0.5
Total overhead costs and activity levels for the year are estimated as follows:
Activity Overhead costs Activity levels
Direct labor 2,400 hours
Oven $120,000 1,900 hours
Packaging $150,000 950 hours
Total $270,000
Questions:
Determine the activitycostdriver rate for packaging costs (three points).
Using the ABC system, for the sugar cookie, compute the estimated overhead costs per 1,000 cookies (three points).
Using the ABC system, for the sugar cookie, compute the estimated operating profit per 1,000 cookies (three points).
Using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated overhead costs per 1,000 cookies (three points).
Using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated operating profit per 1,000 cookies (3 points).
Explain the difference between the profits obtained from the traditional system and the ABC system. Which system provides a better estimate of profitability? Why? (three points).
Problem 2: What is activitybased management and how can it be used to improve the profitability of a company? (12 points)

Advanced Cost Managemement  Anonymous, Sunday, January 8, 2017 at 2:38am
59595
Answer This Question
Related Questions
 algebra  two bakeries produce three types of cookies, chocolate chip, sugar, ...
 college math  two bakeries produce three types of cookies, chocolate chip, ...
 Math grade 5  The New York Subway Bakery is famous for selling large "black and...
 Math grade 5  The New York Subway Bakery is famous for selling large "black and...
 Math grade 56  The New York Subway Bakery is famous for selling large "black ...
 4th grade math  Mary purchased incredients needed to cookies. a table shows the...
 MATH  three brothers try to divide some cookies. The oldest brother gets half ...
 Math  A cookie recipe calls for 1/4 cup of brown sugar for one batch of 24 ...
 Math  Monique is making cookies for the pajama party at her house. She has 31/...
 math  Anuja is baking cookies for her slumber party this weekend. She has one ...
More Related Questions