Abc Costing
Activity-Based Costing
ABC Company produces two products: Product A and Product B. Recently appointed management decided to change from a unit-based, traditional costing system to an activity-based costing system.
The following data have been gathered, to assess the effect of the change:
Product type Quantity Prime Costs Machine Hours Material Moves Setups
Product A 60,000 €150,000 3,500 6,800 800
Product B 15,000 € 30,000 2,750 1,200 450
Expenditures (€) €180,000 €120,000 €80,000 €40,000
Under the current system, the costs of operating equipment (machine hours), materials moves, and setups are assigned to the products on the basis of machine hours.
Required:
1. Compute the unit cost of Product A and Product B using the current unit-based approach.
2. Compute the unit cost of both Products A and B using an activity-based costing approach.
3. Using two cost pools and two drivers, material moves and setups, calculate overhead cost assignments using reduced system and compare results with overhead cost assignments obtained in Requirement 2.
Solution
Shpenzimet totale indirekte = €120,000 + €80,000 + €40,000 = €240,000 Totali i orëve të makinerisë = 3,000 + 2,750 = 6,500 orë Norma e përvetësimit = €240,000 / 6,500 orë = €38.40 (në nivel të kompanisë)
Shpenzimet totale indirekte për: Produktin A €38.40 x 3,500 = €134,400 Produktin B €38.40 x 2,750 = €105,600 €240,000
Kostot për njësi për: Kosto parësore Kosto indirekte Kosto totale Sasia
(njësi) Kosto për njësi
Produktin A €150,000 €134,400 €284,400 60,000 €4.74
Produktin B €30,000 €105,600 €135,600 15,000 €9.04
2.
Kalkulimi i normës për secilin aktivitet Orët e makinerisë €120,000 ÷ 6,250 = €19.20 Lëvizjet e materialeve €80,000 ÷ 8,000 = €10.00 Organizimet €40,000 ÷ 1,250 = €32.00
Shpenzimet totale indirekte për: Produktin A: Orët e makinerisë €19.20 x 3,500 = €67,200 Lëvizjet e
ABC Company produces two products: Product A and Product B. Recently appointed management decided to change from a unit-based, traditional costing system to an activity-based costing system.
The following data have been gathered, to assess the effect of the change:
Product type Quantity Prime Costs Machine Hours Material Moves Setups
Product A 60,000 €150,000 3,500 6,800 800
Product B 15,000 € 30,000 2,750 1,200 450
Expenditures (€) €180,000 €120,000 €80,000 €40,000
Under the current system, the costs of operating equipment (machine hours), materials moves, and setups are assigned to the products on the basis of machine hours.
Required:
1. Compute the unit cost of Product A and Product B using the current unit-based approach.
2. Compute the unit cost of both Products A and B using an activity-based costing approach.
3. Using two cost pools and two drivers, material moves and setups, calculate overhead cost assignments using reduced system and compare results with overhead cost assignments obtained in Requirement 2.
Solution
Shpenzimet totale indirekte = €120,000 + €80,000 + €40,000 = €240,000 Totali i orëve të makinerisë = 3,000 + 2,750 = 6,500 orë Norma e përvetësimit = €240,000 / 6,500 orë = €38.40 (në nivel të kompanisë)
Shpenzimet totale indirekte për: Produktin A €38.40 x 3,500 = €134,400 Produktin B €38.40 x 2,750 = €105,600 €240,000
Kostot për njësi për: Kosto parësore Kosto indirekte Kosto totale Sasia
(njësi) Kosto për njësi
Produktin A €150,000 €134,400 €284,400 60,000 €4.74
Produktin B €30,000 €105,600 €135,600 15,000 €9.04
2.
Kalkulimi i normës për secilin aktivitet Orët e makinerisë €120,000 ÷ 6,250 = €19.20 Lëvizjet e materialeve €80,000 ÷ 8,000 = €10.00 Organizimet €40,000 ÷ 1,250 = €32.00
Shpenzimet totale indirekte për: Produktin A: Orët e makinerisë €19.20 x 3,500 = €67,200 Lëvizjet e