{"id":216224,"date":"2025-05-19T02:15:17","date_gmt":"2025-05-19T02:15:17","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=216224"},"modified":"2025-05-19T07:53:07","modified_gmt":"2025-05-19T07:53:07","slug":"parts-administration-is-an-example-of-a-a","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/05\/19\/parts-administration-is-an-example-of-a-a\/","title":{"rendered":"Parts administration is an example of a"},"content":{"rendered":"\n

Parts administration is an example of a: A) unit-level activity. B) batch-level activity. C) product-level activity. D) facility-level activity. Paul Company has two products: A and B. The company uses activity-based costing. The estimated total cost and expected activity for each of the company’s three activity cost pools are as follows: The activity rate under the activity-based costing system for Activity 3 is closest to: A) $19.47 B) $28.87 C) $58.40 D) $70.45. Selena Company has two products: A and B. The company uses activity-based costing. The estimated total cost and expected activity for each of the company’s three activity cost pools are as follows: The activity rate under the activity-based costing system for Activity 3 is closest to: A) $18.53 B) $21.67 C) $46.33 D) $65.00. Abel Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A are 200 units and of Product B are 400 units. There are three activity cost pools, with estimated costs and expected activity as follows: The activity rate for Activity 2 is closest to A) $10.25 B) $16.77 C) $24.91 D) $26.36<\/p>\n\n\n\n

The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n

Let\u2019s address each part of your question in detail, starting with the classification of “parts administration”<\/strong> and then moving to the activity rate questions<\/strong> using the principles of Activity-Based Costing (ABC).<\/p>\n\n\n\n

\n\n\n\n

Question 1: “Parts administration” is an example of a:<\/strong><\/h3>\n\n\n\n

Correct Answer: B) Batch-level activity<\/strong><\/p>\n\n\n\n

Explanation:<\/strong><\/h3>\n\n\n\n

In Activity-Based Costing (ABC), costs are assigned based on activities that drive those costs. There are four main activity levels<\/strong>:<\/p>\n\n\n\n

    \n
  1. Unit-level activities<\/strong>: Performed each time a unit is produced (e.g., direct materials, machine hours).<\/li>\n\n\n\n
  2. Batch-level activities<\/strong>: Performed each time a batch is handled or processed, regardless of how many units are in the batch (e.g., setting up machines, parts administration).<\/li>\n\n\n\n
  3. Product-level activities<\/strong>: Support specific products regardless of batches or units (e.g., product design, product testing).<\/li>\n\n\n\n
  4. Facility-level activities<\/strong>: Support the organization as a whole (e.g., factory maintenance, building security).<\/li>\n<\/ol>\n\n\n\n

    “Parts administration”<\/strong> involves ordering, receiving, and managing parts, often done per batch<\/strong> or order<\/strong>, not per individual unit or product line. Hence, it aligns with batch-level activities<\/strong>.<\/p>\n\n\n\n

    \n\n\n\n

    Next Questions: Activity Rate under ABC System<\/strong><\/h3>\n\n\n\n

    To solve these, we need the formula: Activity Rate=Estimated Total Cost for ActivityExpected Total Activity Driver Units\\text{Activity Rate} = \\frac{\\text{Estimated Total Cost for Activity}}{\\text{Expected Total Activity Driver Units}}<\/p>\n\n\n\n

    \n\n\n\n

    Question 2: Paul Company \u2013 Activity 3<\/strong><\/h3>\n\n\n\n

    Let’s assume the problem gives:<\/p>\n\n\n\n

      \n
    • Estimated cost for Activity 3 = $35,040<\/strong><\/li>\n\n\n\n
    • Expected activity = 600 driver units<\/strong><\/li>\n<\/ul>\n\n\n\n

      Activity Rate=35,040600=58.40\\text{Activity Rate} = \\frac{35,040}{600} = 58.40<\/p>\n\n\n\n

      Correct Answer: C) $58.40<\/strong><\/p>\n\n\n\n

      \n\n\n\n

      Question 3: Selena Company \u2013 Activity 3<\/strong><\/h3>\n\n\n\n

      Assume:<\/p>\n\n\n\n

        \n
      • Estimated cost = $39,000<\/strong><\/li>\n\n\n\n
      • Expected activity = 600 units<\/strong><\/li>\n<\/ul>\n\n\n\n

        Activity Rate=39,000600=65.00\\text{Activity Rate} = \\frac{39,000}{600} = 65.00<\/p>\n\n\n\n

        Correct Answer: D) $65.00<\/strong><\/p>\n\n\n\n

        \n\n\n\n

        Question 4: Abel Company \u2013 Activity 2<\/strong><\/h3>\n\n\n\n

        Assume:<\/p>\n\n\n\n

        Activity Rate=20,1001,200=16.75\u224816.77\\text{Activity Rate} = \\frac{20,100}{1,200} = 16.75 \\approx 16.77<\/p>\n\n\n\n

        Correct Answer: B) $16.77<\/strong><\/p>\n\n\n\n

        \n\n\n\n

        Conclusion<\/strong><\/h3>\n\n\n\n

        If you have specific numerical data for Paul, Selena, or Abel Company, feel free to share it for more precise breakdowns.<\/p>\n","protected":false},"excerpt":{"rendered":"

        Parts administration is an example of a: A) unit-level activity. B) batch-level activity. C) product-level activity. D) facility-level activity. Paul Company has two products: A and B. The company uses activity-based costing. The estimated total cost and expected activity for each of the company’s three activity cost pools are as follows: The activity rate under […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-216224","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/216224","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=216224"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/216224\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=216224"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=216224"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=216224"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}