The abc analysis recognizes several batchlevel cost

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Unformatted text preview: ith prior costing system Costs per unit with act ivit y­based costing Job Order 410 10 $1,332.50 1,820.00 Job Order 411 200 $571.375 547.750 Job order 410 has an increase in reported unit cost of 36.6% [($1,820 – $1,332.50) ÷ $1,332.50], while jo b order 411 has a decrease in reported unit cost of 4.1% [($547.75 – $571.375) ÷ $571.375]. A co mmo n finding when act ivit y­based costing is implemented is that low­vo lume products have increases in their reported costs while high­vo lume products have decreases in their reported cost. This result is also found in requirements 1 and 2 o f this problem. Costs such as materials­handling costs vary wit h the number of parts handled (a funct ion of batches and complexit y o f products) rather than with direct manufacturing labor­hours, an output­unit leve l cost driver, which was the only cost driver in the previous jo b­costing system. The product cost figures co mputed in requirements 1 and 2 differ because a. the job orders differ in the way they use each of five activit y...
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