(Appendix 7A) Krueger Corporation Is Conducting a Time-Driven Activity-Based Costing

question 91

Multiple Choice

(Appendix 7A) Krueger Corporation is conducting a time-driven activity-based costing study in its Customer Support Department. The company has provided the following data to aid in that study:
Krueger Corporation
Customer Support Department
Data Inputs
$\begin{array}{lr}\text { Resource Data: }\\\text {Number of employees }&12\\\text {Average salary per employee }&\$48,600\\\text {Weeks of employment per year. }&50\\\text {Minutes available per week ( 40 hours \( \times 60 \) minutes) }&2,400\\\text {Practical capacity percentage }&90\%\\\end{array}$
$\begin{array}{lccc}\text { Activity Data: }&\begin{array}{c}\text { Receiving } \\\text { Calls }\end{array} & \begin{array}{c}\text { Resolving } \\\text { Issues }\end{array} & \begin{array}{c}\text { Settling } \\\text { Disputes }\end{array} \\\text { Minutes per unit of the activity }&24 & 26 & 40\end{array}$ $\begin{array}{lccc}\text {Cost Object Data: }&\text { Customer S } & \text { Customer T } & \text { Customer U } \\\text {Number of calls received. }&27 & 20 & 5 \\\text {Number of issues resolved }&15 & 12 & 8 \\\text {Number of disputes settled }&1 & 1 & 0\end{array}$
-On the Customer Cost Analysis report in time-driven activity-based costing,the total cost assigned to Customer T would be closest to:

• A) $126.00
• B) $140.40
• C) $18.00
• D) $284.40

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Definitions:

Underapplied

A situation in which the allocated manufacturing overhead costs are less than the actual overhead costs incurred.

Raw Materials

Basic materials and components that are used in the manufacturing process to produce finished goods.

Journal Entries

Records in accounting that document financial transactions and their impact on the accounts of an organization in a chronological order.

Indirect Materials

are materials used in the production process, but not directly traceable to a finished product, like lubricants for machinery.