University of Cebu - Lapulapu and Mandaue

A.C. Cortes Ave., Looc, Mandaue City

ACCOUNTING 120
Name : ________________ Date : ______________
Schedule : ________________ Score : ______________

MIDTERM – Quiz 1 E.C. CRUSPERO, CPA

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Ex 11-8
PROBLEM I. Eden foods Inc. uses activity-based costing to determine product costs. For each activity
listed in the left column, match an appropriate activity base from the right column. You may use items in
the activity base list more than once or not at all.

Activity Activity Base

Accounting reports a. Engineering change orders
Customer return processing b. Kilowatt hours used
Electric power c. Number of customer orders
Human resources d. Number of customer returns
Inventory control e. Number of direct labor hours
Invoice and collecting f. Number of inventory transactions
Machine depreciation g. Number of inspections
Materials handling h. Number of machine hours
Order shipping i. Number of material moves
Payroll j. Number of payroll checks processed
Production control k. Number of production orders
Production set-up l. Number of purchase orders
Purchasing m. Number of accounting reports
Quality control n. Number of setups
o. Number of customers
Ex 11-11
PROBLEM II. Nordic Night Inc. manufactures entry and dining room lighting fixtures. Five activities are
used in manufacturing the fixtures. These activities and their associated activity cost pools and activity
bases are as follows.

Activity Cost Pool

Activity (Budgeted) Activity Base
Casting P286,000 Machine hours
Assembly 161,000 Direct labor hours
Inspecting 27,600 Number of inspections
Setup 78,000 Number of setups
Materials handling 36,000 Number of loads

Corporate records were obtained to estimate the amount of activity to be used by the two products. The
estimated activity-base usage quantities and units produced are provided in the table below.

Activity Base Entry Dining Total

Machine hours 6,000 5,000 11,000
Direct labor hours 4,600 6,900 11,500
Number of inspections 1,700 600 2,300
Number of setups 240 60 300
Number of loads 780 220 1,000
Units produced 8,282 4,595 12,877

REQUIREMENTS:

a. Determine the activity rate for each activity.

b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each
product.