Activity Based Costing - Please help
jmh
Registered Posts: 42
Hello,
I was wondering if anyone could help me with the below. I do apologise as this is a long question. I do not understand how to calculate it. I would appreciate help with this. Thank you in advance.
The Managing Director of Wyndham Products has heard that Activity Based Costing can enable a company to more accurately calculate the cost of its products.
The company has two production lines in a single factory, each of which produces a single product:
Line A produces the Arbitro which requires 3 hours machine time and 1.5 hours manual assembly per unit and is produced in batches of 10.
Line B makes the Benaro which requires 6 hours assembly by hand per unit and is produced in batches of 40.
Your analysis has revealed the following cost pools:
Stores cost comprise:
50% of the rent
100% of the admin costs
Machine running costs comprise:
80% of the electricity
100% of the maintenance costs
100% of the depreciation
Other costs comprise:
20% of the electricity
50% of the rent
Cost drivers have been identified as follows:
Stores - Number of batches
Machine costs - Machine hours
Other costs - Labour hours
Required
b) Output for the month comprised:
Arbitro - 24 batches of 10
Benaro - 6 batches of 40
Using the cost drivers given calculate cost per batch / hour as applicable.
Output Batches Machine Hours Labour Hours
A
B
Total
Stores cost per batch
Machine cost per hour
Labour cost per hour
I was wondering if anyone could help me with the below. I do apologise as this is a long question. I do not understand how to calculate it. I would appreciate help with this. Thank you in advance.
The Managing Director of Wyndham Products has heard that Activity Based Costing can enable a company to more accurately calculate the cost of its products.
The company has two production lines in a single factory, each of which produces a single product:
Line A produces the Arbitro which requires 3 hours machine time and 1.5 hours manual assembly per unit and is produced in batches of 10.
Line B makes the Benaro which requires 6 hours assembly by hand per unit and is produced in batches of 40.
Your analysis has revealed the following cost pools:
Stores cost comprise:
50% of the rent
100% of the admin costs
Machine running costs comprise:
80% of the electricity
100% of the maintenance costs
100% of the depreciation
Other costs comprise:
20% of the electricity
50% of the rent
Cost drivers have been identified as follows:
Stores - Number of batches
Machine costs - Machine hours
Other costs - Labour hours
Required
b) Output for the month comprised:
Arbitro - 24 batches of 10
Benaro - 6 batches of 40
Using the cost drivers given calculate cost per batch / hour as applicable.
Output Batches Machine Hours Labour Hours
A
B
Total
Stores cost per batch
Machine cost per hour
Labour cost per hour
0
Categories
- All Categories
- 1.3K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 390 NEW! Qualifications 2022
- 174 General Qualifications 2022 discussion
- 16 AAT Level 2 Certificate in Accounting
- 78 AAT Level 3 Diploma in Accounting
- 114 AAT Level 4 Diploma in Professional Accounting
- 8.9K For accounting professionals
- 23 coronavirus (Covid-19)
- 276 VAT
- 96 Software
- 281 Tax
- 148 Bookkeeping
- 7.2K General accounting discussion
- 211 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 589 Job postings
- 16 Who can benefit from AAT?
- 37 Where can AAT take me?
- 43 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 24 Apprenticeships
- 67 AAT membership