Question

5. Jessica owns a small department store in a metropolitan area. For twenty years, the accountant has applied overhead to the various departments -Women's Apparel Men's Apparel, Cosmetics, Housewares, Shoes, and Electronics-based on the basis of employee hours worked. Jessica's daughter, who is an accounting student at a local university, has suggested her mother should consider using activity-based costing (ABC). In an attempt to implement ABC, Jessica and her daughter have identified the following activities (9 pts) Instructions Determine a cost driver for each of the activities listed below. Cost Pool Cost Driver a. Placing orders b. Stocking merchandise C. Waiting on Customers d. Janitorial and maintenance e. Training employees 1 Administrative Advertising and Marketing h. Accounting and Legal Services Wrapping packages Page 3 of 5 759 Words English (US) 30 3

Answer 1

Cost Pool	Cost Driver
a. Placing orders	number of orders; volume of individual orders
b. Stocking merchandise	number of orders; dollar volume of orders
c. Waiting on customers	number of customers; dollar volume of sales
d. Janitorial and Maintenance	square feet occupied; traffic through area
e. Training employees	total number of employees; number of new employees
f. Administrative	number of employees; dollar volume of business
g. Advertising and Marketing	number of ad campaigns
h. Accounting and Legal Services	dollar volume of sales
i. Wrapping packages	number of packages