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Activity Based Costing

Autor:   •  September 6, 2017  •  Coursework  •  1,465 Words (6 Pages)  •  869 Views

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Cost analysis and applications (ACCT1064 / ACCT1068 / ACCT2242)

Week 6

Topic: Activity based costing

Questions to be discussed: Question 6.22 and Question 6.27

Question 6-22        Activity-based costing, manufacturing

  1. Simple costing system:

Total indirect costs = A$95 000 + A$45 000 + A$25 000 + A$60 000 + A$8 000 +  3%[(A$125 × 3200) + (A$200 × 1800)]

                            = A$255 800

Total machine-hours         = 5500 + 4500

                               = 10 000

        Indirect cost rate per machine-hour        = A$255 800[pic 1]10 000

                = A$25.58 per machine-hour

Simple Costing System

Interior

Exterior

Direct materialsa

A$  96 000

A$   81 000

Direct manufacturing labourb

  76 800

     64 800

Indirect cost allocated to each job

(A$25.58 × 5 500; 4 500 machine hours)

  140 690

  115 110

Total costs

A$313 490

A$260 910

Total cost per unit

(A$313 490 ÷ 3 200; A$260 910 ÷ 1 800)

A$    97.97

A$  144.95

        aA$30 × 3200 units; A$45 × 1800 units

        bA$16 × 1.5 × 3200 units; A$16 × 2.25 × 1800 units

  1. Activity-based costing system:

Activity

(1)

Total Cost of Activity

(2)

Cost Driver

(3)

Cost Driver Quantity

(4)

Allocation Rate

(5) = (2) ÷ (4)

Product scheduling

A$95 000

production runs

125c

A$ 760.00 per production run

Material handling

A$ 45 000

material moves

240d

A$ 187.50 per material move

Machine setup

A$ 25 000

machine setups

200e

A$ 125.00 per setup

Assembly

A$ 60 000

machine hours

10 000

A$     6.00 per machine hour

Inspection

A$  8 000

inspections

400f

A$   20.00 per inspection

Marketing

selling price

A$     0.03 per dollar of sales

c40 + 85 = 125;   d72 + 168 = 240;   e45 + 155 = 200;   f250 + 150 = 400

...

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