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# Cost Accounting

Yellow Industries decides to price delivery service according to the results of a recent activity-based costing (ABC) study. The study indicates Yellow should charge \$8 per order, 2% of the order's value for general delivery costs, \$1.25 per item, and \$30 for delivery.
A year later, Yellow collected the following information for two of its best customers:

Cost Driver Customer X Customer Y

Number of orders 18 8

Number of deliveries 10 10

Number of items 2000 4000

Order value \$120,000 \$80,000

Part A) . What are the total delivery costs charged to Customer Y during the year?

Part B) . What are the total delivery costs charged to Customer X during the year?

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Question 2:

Bear Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Bear has established the following standards for the prime costs of one unit of production:

Standard Quantity Standard Price Standard Cost

Direct materials 8 pounds \$1.80 per pound \$14.40

Direct labor .25 hour \$8.00 per hour 2.00

\$16.40

During the month of July, Bear purchased 160,000 pounds of direct materials at a total cost of \$304,000. The total factory wages for November were \$42,000, 90% of which were for direct labor. Bear manufactured 19,000 units of product during July, using 142,500 pounds of direct materials and 5,000 direct labor hours.

A) What is the direct labor (rate) variance for July? Indicate if it is favorable or unfavorable.

B) What is the direct labor efficiency variance for July? Indicate if it is favorable or unfavorable.

#### Solution Preview

Your response is in Excel, with a separate tab for each problem. The computations are in ...

#### Solution Summary

Your response is in Excel, with a separate tab for each problem. The computations are in the cells (just click to see how I got the amount). I computed the total pricing for both customers so you can see how this works. I added a visual chart for the variances and arrows so you can see the pattern of how to do these. This template works for other similar problems.

\$2.19