The Skynet Company Is Noted for an Exceptionally Impressive Line

question 42

Essay

The Skynet Company is noted for an exceptionally impressive line of Mardi Gras masks.Skynet has established the following selling and distribution support activity-cost pools and their corresponding activity drivers for the year 2015:
$$\begin{array} { l r r } \text { Activity } & \underline { \text { Cost } } & \underline { \text { Cost driver } } \\\text { Marketing } & \$ 150,000 & \$ 1,250,000 \text { of sales } \\\text { Customer service } & 50,000 & 10,000 \text { customer } \\\text { Order execution } & 15,000 & 200 \text { orders } \\\text { Warehousing } & 15,000 & 125 \text { product lines }\end{array}$$ Required:
a.Determine the activity-cost-driver rate for each of the four selling and distribution activities.
b.Under what circumstances is it appropriate to use each of the activity-cost drivers?
c.Describe at least one possible negative behavioral consequence for each of the four activity-cost drivers.

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Definitions:

Permanent Tariffs

Long-term taxes imposed on imported goods and services to protect domestic industries from foreign competition, raise government revenue, or both.

Eurozone

The group of European Union countries that have adopted the euro as their official currency.

Common Currency

A currency that is used by several countries, facilitating the ease of trade and financial transactions between them.