Question

Master Budget and Responsibility Accounting Activity-based budgeting The Jerico store of Jiffy Mart, a chain of small neighborhood convenience stores, is preparing its activity- based budget for January 2018. Jiffy Mart has three product categories: soft drinks (35% of cost of goods sold [COGS]), fresh produce (25% of COGS), and packaged food (40% of COGS). The following table shows the four activities that consume indirect resources at the Jerico store, the cost drivers and their rates, and the cost-driver amount budgeted to be consumed by each activity in January 2018. Activity Cost Driver Ordering Number of purchase orders Delivery Number of deliveries Shelf stocking Hours of stocking time Customer support Number of items sold January 2018 Budgeted January 2018 Amount of Cost Driver Used Budgeted Soft Fresh Packaged Cost-Driver Rate Drinks Snacks Food $45 14 24 14 $41 12 62 19 $10.50 16 172 94 $0.09 4,600 34,200 10,750 1. What is the total budgeted indirect cost at the Jerico store in January 2018? What is the total budgeted cost of each activity at the Jerico store for January 2018? What is the budgeted indirect cost of each product category for January 2018? (Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instructions tab you will be marked wrong.) Soft Drinks Fresh Snacks Packaged Food Total Ordering Delivery Shelf-stocking Customer support Total cost Percentage of total indirect costs 2. Which product category has the largest fraction of total budgeted indirect costs? consumes the largest fraction of total budgeted indirect costs.

Answer 1

B E A B с D 1 1 2 Soft Drinks Fresh Snacks Packaged Food 3 Ordering $630.00 $1,080.00 S630.00 4 Delivery $492.00 $2,542.00 $779.00 5 Shelf-stocking $168.00 $1,806.00 $987.00 6 Customer support $414.00 $3,078.00 $967.50 7 Total cost $1.704.00 $8.506,00 $3.363.50 8 Percentage of total indirect costs 12.55% 62.67% 24.78% 9 10 2 11 Fresh Snacks consumes the largest fraction of total budgeted indirect costs. Total $2,340.00 $3,813.00 $2,961.00 $4,459.50 $13,573,50 Calculations are shown below: A B с D E 1 1 2 Soft Drinks Fresh Snacks Packaged Food Total 3 Ordering =45*14 1=45*24 1=45*14 =SUM(B3-D3) 4 Delivery =41*12 -41*62 =41*19 =SUMB4:D4) 5 Shelf-stocking =10.5*16 =10.5*172 =10.5*94 =SUMB5-D5) 6 Customer support =0.09*4600 =0.09*34200 =0.09*10750 =SUMB6-D6) 7 Total cost =SUMB3B6), =SUMC3:CO) =SUMD3:D), =SUME3-E6) 8 Percentage of total indirect costs =B7/SES7 =C7/SES7 =D7/SES7 9 10 2 11 Fresh Snacks consumes the largest fraction of total budgeted indirect costs.