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Ch4 ABC

# Ch4 ABC - \$300,000 = Total Estimated OHD/\$150,000/Estimated...

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Ch4 Activity-Based Costing Monday, February 07, 2011 9:38 AM ASSUME: a company has a 100% markup on cost Sales = \$400,000, what is cost? \$\$ % Sales \$400,000 200% -Cost \$200,000 100% Markup(Gross Profit) 100% ASSUME: a company has a 50% markup on sales Sales = \$400,000, what is cost? \$\$ % Sales \$400,000 100% -Cost \$200,000 50% Markup(GP) 50% ASSUME: a company has a 60% markup on cost Sales = \$320,000, what is cost? \$\$ % Sales \$320,000 160% -Cost \$200,000 100% Markup(GP) 60% ASSUME: a company has a 40% markup on sales Cost = \$400,000, what is sales? \$\$ % Sales \$666,667 100% -Cost \$400,000 60% Markup (GP) 40% ABC- Activity Based Costing (Multiple Cost Drivers) Traditional (Ch 2.) - one cost driver Cost driver= a factor of activity that has a direct cause and effect relationship with resources consumed Example - Exercise 4-1 a.Traditional

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Unformatted text preview: \$300,000 = Total Estimated OHD /\$150,000 /Estimated DL Costs [Std - \$50,000; Custom - \$100,000] 2(DL Costs) = Application Rate 200% of DL Costs a.Machining costs = \$200,000 Machine hours [Std- 1000, Custom - 1000] Machine set-up costs - \$100,000 Set-up hours [Std- 100, Custom - 400] Machining \$200,000 2000 Machine Hours = \$100/machine hour Set Up \$100,000 500 Set Up Hours = \$200/set up hour Traditional STD CUSTOM STD: \$50,000 (200%) = \$100,000 Custom: \$100,000 (200%) = \$200,000 ABC STD Custom Machining Costs: Standard 1000 x \$100 = \$100000 Custom 1000 x \$100 = \$100000 Set Up Costs: Standard 100 x \$200 = \$20,000 Custom 400 x \$200 = \$80,000 \$120,000 \$180,000 Standard - Underpriced Custom - Overpriced The percentage is 100% for the word following "on" [bolded words]...
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