AFM102February92011

AFM102February92011 - Introduction to Management Accounting...

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Click to edit Master subtitle style 5/11/11 © Anthony Atkinson Introduction to Management Accounting February 9, 2011 Time Driven Activity Based Costing 11
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5/11/11 © Anthony Atkinson Key Topics in Today’s Class Time driven activity based costing 22
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5/11/11 © Anthony Atkinson Steps in TDABC Identify the capacity resources and the cost and practical capacity for each Compute the cost per hour for each capacity resource Allocate the capacity resources to activities based on each activity’s use of the capacity resource. 33
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5/11/11 © Anthony Atkinson Blair Box Blair Steel Box Company manufactures large steel boxes that house complex electrical equipment. There are three box types, each of which can be produced in various configurations. However, the variations for each box type are produced in the same way and have the same costs. 44
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5/11/11 © Anthony Atkinson Blair Box 55 CAD/CAM Cutting Welding SQ47 RT245 YC261 Design Fabricate Assembly
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5/11/11 © Anthony Atkinson 66 Units of Activity Consumed Design Fabrication Assembly Product SQ 47 3 6 5 RT 245 3 1 5 YC 261 5 3 1 Hours of Resource Consumed Supplies (Variable Cost) CAD/ CAM Cutting Welding Activity Design 2 4 1 $500 Fabrication 1 3 2 $2,500 Assembly 6 3 14 $1,000 Resource Hours Available (Capacity) Total Capacity Cost CAD/CAM 400 $50,000 Cutting 300 $60,000 Welding 600 $24,000 Required: 1. What is the cost of each of the activities Blair Steel Box undertakes? 2. What is the cost of producing each product?
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5/11/11 © Anthony Atkinson 77 Capacity Resources Cost Hours Cost/HR CAD/CAM 50,000 400 125 Cutting 60,000 300 200 Welding 24,000 600 40
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AFM102February92011 - Introduction to Management Accounting...

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