Activity Based Costing - Please help
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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
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