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Flowers divides its costs into six categories: 1) ingredients (direct materials), direct labor, 3) packaging, 4) utilities, 5) depreciation and amortization and 6) other indirect costs.

It is able to directly trace the allocation of ingredients and direct labor costs. The numbers are somewhat rounded the numbers some to simplify the math. As a result, the numbers wont match the share of costs.

Here are the direct costs for

ingredients direct labor costs

Bread 750,000,000 440,000,000

Snack Cakes 200,000,000 110,000,000

Frozen bread 50,000,000 50,000,000

Packaging, utilities, depreciation and amortization and other indirect costs are indirect costs. The amount of spending on the indirect costs are as follows:

Packaging $169,930,000

Utilities $55,326,000

Other indirect costs $252,919,000

Depreciation $144,124,000

4. As part of its activity-based costing study, Flowers analyzed the cost drivers for utilities and for depreciation.

Flowers concluded that the cost driver for both utilities and depreciation is the sum of cooking and freezing time.

Flowers concluded that the time that a machine operates for leads to both more utility costs and more depreciation expense. Flowers concluded that cooking time and cooling (freezing) time both generate utility and depreciation costs at about the same rate per hour so heating and cooling time can be aggregated (added together). The firm finds that baking bread takes 30 minutes on average and baking snack cakes takes 20 minutes. Frozen bread and buns have to be baked and then frozen requiring 30 minutes for baking and 5 hours for freezing.

Based on that analysis, they generated the following table of total cooking and cooling time per category.

Bread 456,000 hours

Snack cakes 74,000 hours

Frozen bread and buns 470,000 hours

Calculate the dollar amount of utility costs that are allocated to 1) fresh bakery goods, 2) snack cakes, and 3) frozen bakery goods under the ABC costing system.

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