points) PROBLEM 1. Dwight Schrute provides consulting services. The company uses activity-based costing (ABC) to allocate...

 

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points) PROBLEM 1. Dwight Schrute provides consulting services. The company uses activity-based costing (ABC) to allocate its support costs. The costs and cost drivers associated with the four support activity cost pools follow below: Activities Cost Cost driver Unit Level $400,000 25,000 consultant hours Batch Level $420,000 150 site visits Customer Level $120,000 Percentage of use Facility Level $200,000 40 clients One particular client, Phyllis Vance, utilized 3,000 consultant hours, required 25 site visits, and consumed 30 percent of the customer-level activities. a) Had the company used consultant hours as a companywide allocation base, how much overhead would it have allocated to the Phyllis Vance job? b) How much overhead is allocated to the Phyllis Vance job using activity-based costing? d) Comment on the appropriateness of allocating organization- (or facility-) level costs to c) How can the use of activity-based pricing help Dwight Schrute's profitability? products. What are the pros and cons of doing so? points) PROBLEM 1. Dwight Schrute provides consulting services. The company uses activity-based costing (ABC) to allocate its support costs. The costs and cost drivers associated with the four support activity cost pools follow below: Activities Cost Cost driver Unit Level $400,000 25,000 consultant hours Batch Level $420,000 150 site visits Customer Level $120,000 Percentage of use Facility Level $200,000 40 clients One particular client, Phyllis Vance, utilized 3,000 consultant hours, required 25 site visits, and consumed 30 percent of the customer-level activities. a) Had the company used consultant hours as a companywide allocation base, how much overhead would it have allocated to the Phyllis Vance job? b) How much overhead is allocated to the Phyllis Vance job using activity-based costing? d) Comment on the appropriateness of allocating organization- (or facility-) level costs to c) How can the use of activity-based pricing help Dwight Schrute's profitability? products. What are the pros and cons of doing so?