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raketka [301]
3 years ago
7

Explain what is meant by an activity measure. Identify an appropriate activity measure for analyzing the cost structure of the b

ook donations department within the university’s library. Justify your answer. Is the activity measure you identified a true cost driver? Explain
Business
2 answers:
4vir4ik [10]3 years ago
8 0

Answer:

Explanation:

• ACTIVITY MEASURE: A measure of the amount of activity that drives the costs in an activity cost pool

• It is a quantitative measure of how much activity is performed, such as number of books processed.

• A COST DRIVER: is an activity that causes the total cost to change.

• In this case the NUMBER OF BOOKS PROCESSED can be a cost driver

• Since the salary, stipend, and facility costs are essentially fixed that means the number of books processed is not a true cost driver for those costs.

• However, the number of books processed does drive the total cost for the RFID tags and would be considered a true cost driver for this cost.

Gala2k [10]3 years ago
6 0

Answer:

Refer below for the explanation.

Explanation:

-Activity Measure Definition: A portion base in a movement based costing framework; in a perfect world, a proportion of the measure of action that drives the expenses in an action cost pool, hence its a quantitive measure.

-An event that occurs the total cost to change is called cost driver.

-Number of books can be a cost driver.

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alexdok [17]

Answer:

variable cost per bushel = $0.18848

total fixed costs = $6,652

Explanation:

we can use the high-low method of accounting to determine the variable and fixed costs:

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  • highest activity level = 100,000 bushels

  • lowest activity cost = $7,500 (*doesn't make sense to use $75,000)
  • lowest activity level = 4,500

variable cost per unit = (highest activity cost - lowest activity cost) / (highest activity units - lowest activity units)

variable cost per unit = ($25,500 - $7,500) / (100,000 - 4,500) = $18,000 / 95,500 bushels = $0.18848 per bushel, since the quantities are large, we cannot round up

fixed costs = highest activity cost - (variable cost x highest activity units)

fixed costs = $25,500 - ($0.18848 x 100,000) = $6,652

6 0
3 years ago
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