Activity Cost Rate
| Input information | ||||
| Schedule of Selling and Administrative | ||||
| Activity | Costs Activity Activity Cost Rate | Actual Cost Driver Level | Activity Cost | |
| Make sales calls | $60 per sales call | 60 sales calls | $ 3,600 | |
| Prepare sales orders | $10 per sales order | 900 sales orders | 9,000 | |
| Handle inquiries | $5 per minute | 1,000 minutes | 5,000 | |
| Ship products | $1 per case sold | 50,000 cases | 50,000 | |
| Process invoices | $20 per invoice | 950 invoices | 19,000 | |
| Process credits $ | 20 per notice | 40 notices | 800 | |
| Process billings and collections | $7 per billing | 1,050 billings | 7,350 | |
| Total selling and administrative activity costs | $94,750 | |||
| Activity | Planned Activity Cost Rate | Planned Annual Cost Driver Level | ||
| Make sales calls | $60 | 59 | ||
| Prepare sales orders | $10 | 850 | ||
| Handle inquiries | $5.10 | 1,000 | ||
| Ship products | $0.60 | 50,000 | ||
| Process invoices | $1 | 500 | ||
| Process credits | $10 | 5 | ||
| Process billings and collections | $4 | 600 | ||
| Activity | Activity Cost Rate | Activity Cost Driver Level | ||
| Make sales calls | $60 | 60 | ||
| Prepare sales orders | $10 | 900 | ||
| Hand enquiries | $5 | 1000 | ||
| Ship products | $0.60 | 50,000 | ||
| percentage cost | Sales revenue | |||
| Customer Service Agency | 1.5% | 250,000 | ||
| Question 1 | ||||
| Star Bakery | ||||
| Income Statement for the Customer Group | ||||
| Sales | ||||
| Sales per case | No. of cases | |||
| $ 5.00 | 50,000 | $ 250,000.00 | ||
| Cost of Goods Sold | ||||
| Unit cost Per Case | No. of cases | |||
| $ 3.50 | 50,000 | $ 175,000.00 | ||
| Gross Margin | $ 75,000.00 | |||
| Less: Selling and adminstrative costs | ||||
| Make sales calls | $3,600 | |||
| Prepare sales orders | $9,000 | |||
| Hand enquiries | $5,000 | |||
| Ship products | $30,000 | |||
| Customer Service Agency | $ 3,750.00 | $51,350 | ||
| Operating Income | $ 23,650.00 | |||
| Question 2 | ||||
| Activity | Activity Cost Rate | Activity Cost Driver Level | Activity Cost | |
| Make sales calls | $60 | 59 | $3,540 | |
| Prepare sales orders | $10 | 850 | $8,500 | |
| Hand enquiries | $5 | 1000 | $5,100 | |
| Ship products | $0.60 | 50,000 | $30,000 | |
| percentage cost | Sales revenue | |||
| Customer Service Agency | 1.5% | 250,000 | $3,750 | |
| $50,890 | ||||
| Question 3: Differences between planned activity costs an customer budgeted activity | ||||
| Planned activity cost | Budgeted activity costs | Difference | ||
| $51,350 | $50,890 | $ 460.00 | ||
| Question 4 | ||||
| Initial Activity Cost | Activity cost after outsourcing | Cost savings from outsourcing and changing freight companies | ||
| $ 94,750.00 | $ 51,350.00 | $ 43,400.00 | ||
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Question 
Activity Cost Rate
The following Exercises and/or Problems are required for the course.
Activity Cost Rate
Exercise(s) and/or Problem(s):
- Complete Chapter 18: Case 3
The textbook reading is from
- Financial and Managerial Accounting 10th Edition by Belverd E. Needles, Martin Powers, and Susan V Crosson
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