activity dictionary CCD

activity dictionary CCD - Transcript

Activivity name Supervising employees Processing tranactions Preparing statements Answering questions

activity description scheduling coordinating and evaluating performance Sorting keying and verifying Reviewing printing mailing Answering logging reviewing data bases and calling back

Activity driver Total labour time for each activity No of transactions No of statements No of calls

HBT produces and sells two secure combination system AW and SZ HBT has the following operating data for the two products AW Production volume Selling price Unit direct materials and labour direct labour hours direct labour hours per unit Rs 400 Rs 200 25000 5 5000 SZ 20000 Rs 200 Rs 80 75000 3 75

The volume based costing system that the firm uses assigns factory overhead based on DLH The firm has a total budgeted overhead of Rs 2000000 The overhead rate per direct labour hour 2000000 100000 20 00 200000

Total ohd assigned to AW factory ohd unit 100 Factory ohd per unit of SZ

20 25000 500000

Rs 75

Product profitability analysis based on firm s volume based costing system AW Unit selling price Material and labour overheads Cost unit Product margin 200 100 300 Rs 100 400 80 75 155 45 SZ 200

for the two products

Activity based costing analysis Activity Engineering Setups machine running Packing Total Budgeted cost RS 125000 300000 1500000 75000 2000000 Cost Driver Engineering hours No of set ups Machine hours No of packing orders

HBT has also gathered the following operating data AW Engineering hours Number of set ups Machine hours Number of packing orders 5000 200 50000 5000 SZ 7500 100 100000 10000 Total 12500 300 150000 15000

1 Cost driver Engineering hours Number of set ups Machine hours Number of packing orders Cost

2 125000 300000 1500000 75000

3 4 2 3 Activity consumption Activity Rate 12500 Rs 10 300 150000 15000

1000 10 5

Factory ohd cost assigned to AW and SZ AW 5000 units Cost Driver Activity rate Engineering hours 10 Number of set ups 1000 Machine hours 10 Number of packing orders 5 Total

Activities 5000 200 50000 5000

Total overhead Ohd unit 50000 10 200000 40 500000 100 25000 5 155

Ohd per unit of SZ is

61 25

Product profitability analysis under the ABC costing system AW Unit selling price 400 Less mat and labour 200 overheads 155 Total cost 355 Product margin 45

SW 200 80 61 25 141 25 58 75