ACC 560 MART Extraordinary Success/acc560mart.com ACC 560 MART Extraordinary Success/acc560mart.com | Page 22

Electricity, plant lighting 21,000
Engineering prototypes 60,000
Depreciation, plant 210,000
Electricity, machinery 36,000
Machine maintenance wages 19,000
Instructions
Classify the above costs of Santana Corporation into activity cost pools
using the following: engineering, machinery, machine setup, quality
control, factory utilities, and maintenance. Next, identify a cost driver
that may be used to assign each cost pool to each line of snowmobiles.
E4-14
Venus Creations sells window treatments (shades, blinds, and
awnings) to both commercial and residential customers. The following
information relates to its budgeted operations for the current year.
The controller, Peggy Kingman, is concerned about the residential
product line. She cannot understand why this line is not more
profitable given that the installations of window coverings are less
complex for residential customers. In addition, the residential client
base resides in close proximity to the company office, so travel costs
are not as expensive on a per client visit for residential customers. As a
result, she has decided to take a closer look at the overhead costs
assigned to the two product lines to determine whether a more
accurate product costing model can be developed. Here are the three
activity cost pools and related information she developed: