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Category > Business & Finance Posted 25 May 2017 My Price 8.00

Activity-Based Budgeting (ABB)

 

    1. Activity-Based Budgeting (ABB) OFC Company of Kansas City prints business forms and other specialty paper products, such as writing paper, envelopes, note cards, and greeting cards. Its Busi- ness Services division offers inventory-management services and desktop delivery on request. The division uses an activity-based costing system. The budgeted usage of each activity cost driver and cost-driver rates for January 2010 for the Business Services division are:

 

Activity

Storage

Cost Driver

Cartons in inventory

BudgetedActivity

400,000

Cost-Driver Rate

$0.4925/carton/month

Requisition handling

Requisitions

30,000

$ 12.50

Pick packing

Lines

800,000

$ 1.50

Data entry

Lines

800,000

$ 0.80
 

Requisitions

30,000

$ 1.20

Desktop delivery

Per delivery

12,000

$ 30.00

 

The division made 11,700 deliveries to deliver 1,170,000 cartons to customers. The division expects the average delivery size in January 2010 to remain unchanged.

Required

  1. What is the total budgeted cost for each activity and for the Business Services Division in January 2010?

  2. What is the budgeted cost per delivered carton and the total budgeted cost for the Business Services Division if the firm uses a single cost rate (based on the number of cartons delivered) to estimate cost?

  3. Dories Supply Chain Management Company offers to install an electronic order processing system that transmits customer requisitions via the Internet to the Business Services Division for immediate pick, packing, and delivery. No requisition handling and data entry will be needed once the system is fully functional. How much savings can the Business Services Division expect from switching to the new system before considering the payment to Dories? Can you estimate the amount if the firm uses a single cost rate (based on the number of cartons delivered) to determine the budgeted cost for the division?

 

 

 
 

Answers

Alpha Geek
(8)
Status NEW Posted 25 May 2017 08:05 AM My Price 8.00

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file 1495701739-Answer.docx preview (419 words )
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