Questions
22321 Cost Management Systems - Spring 2025 Practice quiz: Topics 3, 4 and 5
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Imagine a small company that bakes cupcakes. The cupcakes are made to be standardised size (about 60 grams each), however they are sold in orders of various quantities The company organised into three departments. For each department select the most appropriate cost driver to allocate that department's indirect costs: Department Description Cost driver? Mixing Wet and dry ingredients are combined and mixed together [ Select ] Number of employees Number of customer orders Number of cakes Baking Cakes are baked in ovens [ Select ] Number of employees Number of machine hours Number of direct labour hours Sales Cakes are sold to customers [ Select ] Number of cakes Number of machine hours Number of customer orders
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Step-by-Step Analysis
Question restatement: A small cupcake company has three departments and needs to select the most appropriate cost driver to allocate that department's indirect costs. The departments and their descriptions are:
- Mixing: Wet and dry ingredients are combined and mixed together. Cost driver options under consideration: Number of employees, Number of customer orders, Number of cakes, Number of machine hours, Number of direct labour hours.
- Baking: Cakes are baked in ovens. Cost driver options under consideration: Number of employees, Number of machine hours, Number of direct labour hours, Number of cakes.
- Sales: Cakes are sold to customers. Cost driver options under consideration: Number of cakes, Number of machine hours, Number of customer orders.
Analysis for Mixing:
- Number of employees: This measures headcount and might reflect overhead in some settings, but the mixing a......Login to view full explanationLog in for full answers
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Imagine a small company that bakes cupcakes. The cupcakes are made to be standardised size (about 60 grams each), however they are sold in orders of various quantities The company organised into three departments. For each department select the most appropriate cost driver to allocate that department's indirect costs: Department Description Cost driver? Mixing Wet and dry ingredients are combined and mixed together [ Select ] Number of cakes Number of employees Number of customer orders Baking Cakes are baked in ovens [ Select ] Number of direct labour hours Number of machine hours Number of employees Sales Cakes are sold to customers [ Select ] Number of cakes Number of customer orders Number of machine hours
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