Magenta Company has identified seven activities as part of its manufacturing process and chosen corresponding activity drivers for each activity. The chart below lists the total cost of each activity, the proportion of activity driver used for each of Magenta's two products, and the activity cost assigned to each product. Fill in the blanks below: Activity Cost Activity DriverProportion used by Activity Cost: Prod. 1 Activity Cost: Prod. 2???Prod. 1Prod. 2??Design$60,000Design time40%60%a.b.Preparation$18,000Labor hours50%c.$9,000d.Machining$90,000Machine hourse.f.$27,000g.Finishingh.Batches40%i.$10,000j.Inspectionk.Unitsl.m.$3,000$6,000Packagingn.Orderso.20%$13,500p.Shipping$17,000Packages70%q.r.$5,100
What will be an ideal response?
a. $24,000 = $60,000 × 40%
b. $36,000 = $60,000 × 60%
c. 50% = 100% ? 50%
d. $9,000 = $18,000 ? $9,000
e. 30% = $27,000/$90,000
f. 70% = 100% ? 30%
g. $63,000 = $90,000 ? $27,000
h. $25,000 = $10,000/40%
i. 60% = 100% ? 40%
j. $15,000 = $25,000 ? $10,000
k. $9,000 = $3,000 + $6,000
l. 33% = $3,000/$9,000
m. 67% = 100% ? 33%
n. $16,875 = $13,500/80% (see o)
o. 80% = 100% ? 20%
p. $3,375 = $16,875 ? $13,500
q. 30% = 100% ? 70%
r. $17,000 × 70% = $11,900
Activity proportion × Total cost = Activity cost. Total cost = Sum of activity costs.
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