Accordingly the abc system provides more accurate

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Accordingly, the ABC system provides more accurate costs for quality control. 7.42 ABC Costs, Uncertainties, ABM, Non-Value-Added Activities - The Pond Kit Com- pany A. Total Cost Per Batch: Material handling 20 parts x $1 per part x 10 kits $ 200.00 Forming 2 moulding hours x $40 per hour x 10 kits 800.00 Moulding setup 1 batch x $50.00 50.00 Packing and shipping 30 kgx $1.30 per kgx 10 kits 390.00 Inspection $10 per kit x 10 kits 100.00 Direct labour $20 per kit x 10 kits 200.00 Direct materials $100 per kit x 10 kits 1 ,000.00 Total costs $2 ,740.00
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B. Total budgeted cost per kit = Total budgeted cost per batch / Number of kits per batch = $2,740.00 / 10 kits = $274.00 per kit C. Cost per Kit Cost Per Batch (10 kits per batch) Total Cost from Parts A and B $2,740 $274.00 Marketing ($15,000/1,000 batches)      15 1.50 Customer Service ($25,000/1,000 batches)      25       2.50 Total $2     ,780     $278.00 D. There are other potential activities that could be chosen for this company. Some activi- ties could be separated further into more pools. For example, packing and shipping could be separated into a packing activity and a shipping activity. Moulding may consist of several different tasks that could be considered separate activities. Alternatively, some of these cost pools could possibly be combined, such as molding setup and forming.
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  • Winter '13
  • DouglasKong
  • The Pond Kit Company

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