116B Test 2 Ch 4-7 Sp2016

Hi, I need help with these 4 questions

1) Activity-based costing uses a number of activity cost pools, each of which may have a different allocation base. (True or False)

116B Test 2 Ch 4-7 Sp2016

2) Errera Corporation has two major business segments-Retail and Wholesale. In July, the Retail business segment had sales revenues of $100,000, variable expenses of $54,000, and traceable fixed expenses of $16,000. During the same month, the Wholesale business segment had sales revenues of $920,000, variable expenses of $386,000, and traceable fixed expenses of $156,000. Common fixed expenses totaled $269,000 and were allocated as follows: $156,000 to the Retail business segment and $113,000 to the Wholesale business segment.

Required: Prepare a segmented income statement in the contribution format for the company. Omit percentages; show only dollar amounts.

116B Test 2 Ch 4-7 Sp2016

3) Loader Corporation has an activity-based costing system with three activity cost pools-Processing, Setting Up, and Other. The company's overhead costs consist of equipment depreciation and indirect labor and are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Equipment depreciation totals $88,000 and indirect labor totals $1,000. Data concerning the distribution of resource consumption across activity cost pools appear below:

Processing: Equipment depreciation=0.10, Indirect Labor= 0.60

Setting up: Equipment Depreciation=0.50, Indirect Labor= 0.10

Other: Equipment Depreciation=0.40, Indirect Labor= 0.30

116B Test 2 Ch 4-7 Sp2016

Required: Assign overhead costs to activity cost pools using activity-based costing.

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