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What are the cost drivers and cost driver rates for material procurement, general accounting, and quality control?

Accounting

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Part 24

The cost driver for material procurement is typically the number of orders, as each order incurs administrative and processing costs.

  • B. orders.

Use the following information to answer questions 25 and 26:

  • Quality control cost = Le 22,000
  • General accounting cost = Le 6,000
  • Number of inspections = 1,100
  • Number of customers = 200

Part 25· 2 steps

The cost driver rate for general accounting is?

  1. Identify the cost driver for general accounting.

    General accounting costs are often driven by the overall activity of the business, which can be measured by the number of customers.

  2. Calculate the cost driver rate.

    Cost driver rate=General accounting costNumber of customers\text{Cost driver rate} = \frac{\text{General accounting cost}}{\text{Number of customers}} Cost driver rate=Le 6,000200 customers=Le 30.00/customer\text{Cost driver rate} = \frac{\text{Le } 6,000}{200 \text{ customers}} = \text{Le } 30.00/\text{customer}
    • C. Le 30.00/customer.

Part 26· 2 steps

What is the cost driver rate for quality control?

  1. Identify the cost driver for quality control.

    Quality control costs are directly related to the effort spent on ensuring quality, which is measured by the number of inspections.

  2. Calculate the cost driver rate.

    Cost driver rate=Quality control costNumber of inspections\text{Cost driver rate} = \frac{\text{Quality control cost}}{\text{Number of inspections}} Cost driver rate=Le 22,0001,100 inspections=Le 20.00/inspection\text{Cost driver rate} = \frac{\text{Le } 22,000}{1,100 \text{ inspections}} = \text{Le } 20.00/\text{inspection}
    • B. Le 20.00/inspection.

Part 27

Companies that exist to provide meals to their clients use service costing, as they are providing an intangible service rather than manufacturing a physical product.

  • D. service costing.

Use the data below to answer questions 28 to 30:

  • Units introduced into process = 5,000 units for GH¢ 30,000
  • Actual production = 4,800 units for GH¢ 52,800
  • Normal loss = 5%

Part 28· 1 step

Calculate the normal loss for the process.

  1. Calculate the normal loss units.

    Normal loss is a percentage of the units introduced into the process.

    Normal loss units=Units introduced×Normal loss percentage\text{Normal loss units} = \text{Units introduced} \times \text{Normal loss percentage} Normal loss units=5,000 units×0.05=250 units\text{Normal loss units} = 5,000 \text{ units} \times 0.05 = 250 \text{ units}
    • C. 250 units

Part 29· 2 steps

Production in the process resulted in

  1. Calculate the expected output.

    Expected output is the units introduced minus the normal loss units.

    Expected output=Units introduced−Normal loss units\text{Expected output} = \text{Units introduced} - \text{Normal loss units} Expected output=5,000 units−250 units=4,750 units\text{Expected output} = 5,000 \text{ units} - 250 \text{ units} = 4,750 \text{ units}

  2. Determine if there is an abnormal loss or gain.

    Compare the actual production with the expected output.

    Abnormal loss/gain=Actual production−Expected output\text{Abnormal loss/gain} = \text{Actual production} - \text{Expected output} Abnormal loss/gain=4,800 units−4,750 units=50 units (gain)\text{Abnormal loss/gain} = 4,800 \text{ units} - 4,750 \text{ units} = 50 \text{ units (gain)}

    Since actual production

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