P5-59 - P5-59 ADA Pharmaceutical Company Volume-Based...

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Unformatted text preview: P5-59 ADA Pharmaceutical Company Volume-Based Costing vs. ABC Costing P5-59 Diomycin $205,000 250,000 7,200 1,000,000 Homycin $265,000 234,000 6,800 500,000 Addolin $258,000 263,000 2,000 300,000 $90,000.00 $85,000.00 $25,000.00 545,000.00 584,000.00 546,000.00 $0.545 $1.168 $1.820 200 200 200 150 45 600 400 300 200 100 800 600 650 700 500 1,600 1,200 1,150 1,050 645 $2,000.00 6,000.00 8,000.00 7,200.00 3,600.00 $26,800.00 $6,000.00 12,000.00 12,000.00 9,600.00 8,000.00 $47,600.00 $8,000.00 18,000.00 26,000.00 33,600.00 40,000.00 $125,600.00 16,000 36,000 46,000 50,400 51,600 $481,800.00 $546,600.00 $646,600.00 Cost per capsule $0.482 $1.093 $2.155 Difference $0.063 $0.075 $(0.335) Cost of direct materials Cost of direct labor Number of direct labor hours Number of capsules manufactured 1. Traditional System: Predetermined OH Rate $12.50 Total Cost Cost per capsule 2. ABC Costing Activity: Machine setup Plant management Supervision of direct labor Quality inspection Expediting production orders Total Overhead Activity Cost Allocation Machine setup Plant management Supervision of direct labor Quality inspection Expediting production orders Total Overhead Total Cost Driver Overhead Cost Driver Setup hours $16,000 1,600 Workers 36,000 1,200 Direct labor-hours 46,000 1,150 Inspection hours 50,400 1,050 Customers serviced 51,600 645 $200,000 Rate $10.00 $30.00 $40.00 $48.00 $80.00 Total $728,000 747,000 16,000 1,800,000 ...
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