ACIS 2116 Chapter 6 Part 2 with blanks

ACIS 2116 Chapter 6 Part 2 with blanks - Activity-Based...

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1 Activity-Based Costing ACIS 2116 Chapter Six – Part 2
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2 ABC Costing Example Continued Assume that a batch of Hokie Paraphernalia products has the following specifications: Direct Labor Hours 10 Purchase Orders 1 Shipments received 4 Machine Setups 2 Inspections 2
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3 ABC Costing Example How much overhead would be allocated to the batch if the traditional overhead allocation based on direct labor hours is used? 10 DLH * $115 per DLH = $1,150
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4 ABC Costing Example How much overhead would be allocated to the batch if ABC Costing is used? Activity Amount Overhead Rate Overhead Allocated Purchase Orders 1 X ________ ________ Shipments received 4 X 6.25 $ 25.00 $ Machine Setups 2 X 122.22 $ 244.44 $ Inspections 2 X ________ _________ Total _________
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5 ABC versus Traditional Overhead Allocation When batch-level and product-level costs are present, ABC will usually shift costs from ____ volume products, produced in large batches, to ___ volume products produced in small batches. This cost shifting will usually have its greatest impact on the per unit cost of the ___ volume products.
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6 ABC versus Traditional Overhead Allocation For example, assume that a company calculates POHR using the traditional
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ACIS 2116 Chapter 6 Part 2 with blanks - Activity-Based...

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