Question

QUESTION 10 In activity-based costing, costs must first be allocated to activity cost pools and then they are allocated from the activity cost pools to products, customers, and other cost objects. O True O False QUESTION 11 Sales budgets usually show expected sales in: 1.dollars O 2. units O 3. both o 4.neither QUESTION 12 All of Gaylord Company's sales are on account (credit). Thirty-five percent of these sales are collected in the month of sale, 45% in the month following sale, and the rest are collected in the second month following sale. Bad debts are negligible and should be ignored. The following are budgeted sales data for the company: January February March $50,000 $60,000 $40,000 30,000 April Total sales What is the amount of cash that should be collected in March? 1.$39,000 O 2. $37,000 3. $27,500 4.$51,000

Answer 1

Answers

• All working required forms part of the answer
• Answer #10

TRUE.
Overhead costs are first allocated to activity cost pools.
Then Activity rates are calculated based on no. of activity cost drivers.
Followed by that, these cost are allocated to product and customers.

• Answer #11
  Correct answer is Option #3: Both, Sales Budget usually shows expected sales in Units and in dollars.
  Example:

	Jan	Feb
Expected units	50000	55000
Sale price per unit	$                         10	$                       10
Budgeted Sales	$              500,000	$             550,000

• Answer #12

Cash that would be collected in march would include:
---35% of march sales
--45% of February Sales, and
--20% of January sales

Hence, Cash collected in March = (40000 x 35%) + (60000 x 45%) + (50000 x 20%)
= 14000 + 27000 + 10000
= $ 51,000

Correct Answer = Option #4 $ 51,000