Question

The Georgetown store of Jiffy Mart, a chain of small neighborhood convenience stores, is preparing its activity- based budget for January 2013. Jiffy Mart has three product categories: soft drinks (35% of cost of goods sold [COGS]), fresh snacks (25% of COGS) , and pack-aged food (40% of COGS). The following table shows the four activities that consume indirect resources at the Georgetown store, the cost drivers and their rates, and the cost- driver amount budgeted to be consumed by each activity in January 2013.



Required
1. What is the total budgeted indirect cost at the Georgetown store in January 2013? What is the total budgeted cost of each activity at the Georgetown store for January 2013? What is the budgeted indirect cost of each product category for January 2013?
2. Which product category has the largest fraction of total budgeted indirect costs?
3. Given your answer in requirement 2, what advantage does Jiffy Mart gain by using an activity- based approach to budgeting over, say, allocating indirect costs to products based on cost of goodssold?


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  • CreatedJanuary 15, 2015
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