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Cost Pools	Cost Drivers	Estimated Overhead	Expected Use of Cost Drivers	Expected Use of Cost Driver: Basic Wedding Cake	Expected Use of Cost Driver Multi-Layer Wedding Cake	Expected Use of Cost Driver Custom Wedding Cake
Initial customer meeting	Number of hours spent with customer	$15,000	4.5 hours	0.75 hour	1.25 hours	2.5 hours
Purchasing ingredients	Number of purchase requisitions	$15,000	1000 requisitions	150 requisitions	300 requisitions	550 requisitions
Making and baking the wedding cakes	Direct Labor hours	$40,000	5.5 hours	1.25 hour	2 hours	2.25 hours
Decorating the wedding cakes	Direct Labor hours	$70,000	9.5 hours	1.75 hours	3 hours	4.75 hours
Final customer meeting and cake delivery	Number of wedding cakes	$10,000	4200	1500 cakes	1700 cakes	1000 cakes

1. Explain the difference between a job-order costing system and an activity-based costing system. Job order costing is used for and individual production. Activity based costing is designed to assign cost to activities.

2. Identify two reasons why an activity-based costing system may be appropriate for the Suncat Cake Shop. The reason it may be appropriate is that the process of making the cake is

3. Above, you will see Mr. Suncats cost pools and cost drivers for Suncat Cake Shop. Do you agree with them? Why or why not? If why not, what changes would you recommend?

4. Using the information above, compute the activity-based overhead rate for each of the five cost pools. Round your answer to the nearest cent. Show all calculations and clearly label your answer.

1. Using activity-based costing, compute the total manufacturing overhead cost that is expected to be allocated to each product. Show all calculations and clearly label your answer.

1. Basic Wedding Cake

2. Multi-layer Wedding Cake

3. Custom Wedding Cake

5. Using activity-based costing, compute the product cost for each product. Show all calculations and clearly label your answer.

1. Basic Wedding Cake

2. Multi-layer Wedding Cake

3. Custom Wedding Cake

7. Compare the total manufacturing overhead cost and the product cost for each product under both the job-order costing method and the activity-based costing method. Which costing method would you recommend to Mr. Suncat for Suncat Cake Shop and why?

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