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EXERCISE 8-8

a) Machine hour
b) Number of product design
c) Number of setup
d) Machine hours
e) Number of customer
f) Number of customer orders received
g) Number of unit produced

EXERCISE 8-9
Computation of activity rate:
ACTIVITIES ESTIMATED TOTAL EXPECTED ACTIVITY RATE
OVERHEAD COST ACTIVITY
Machine setups $ 72, 000 400 $ 180
Special processing $ 200, 000 5, 000 $ 40
General factory $ 816, 000 24, 000 $ 34

Assigning overhead cost to product:
Overhead cost for the Hubs product :
ACTIVITY COST
ACTIVITY RATE ACTIVITY ABC COST
POOLS
Machine setup $ 180 100 $ 18, 000
Special processing $ 40 5, 000 $ 200, 000
General factory $ 34 8, 000 $272, 000
Total $490, 000

Overhead cost for the Sprockets product:

ACTIVITY COST
ACTIVITY RATE ACTIVITY ABC COST
POOLS
Machine setup $ 180 300 $ 54, 000
Special processing $ 40 - $ 40
General factory $ 34 16, 000 $ 544, 000
total $ 598, 040

Activity- based costing product costs:
ITEM HUBS SPROCKET
Direct material $ 32 $ 18
Direct labor $ 15 $ 15
Manufacturing overhead $ 49 $ 14. 95
Unit product cost $ 96 $ 47. 95

EXERCISE 8-10
First- stage allocation for the activity based costing

PROCESSING
PROCESSING
OPENING OTHER OTHER
ITEM DEPOSITS & TOTAL
ACCOUNT CUSTOMER ACTIVITIES
WITHDRAWALS
TRANSACTIONS
Teller
$ 8000 $ 104, 000 $ 32, 000 $ 16, 000 $ 160, 000
wages
Assistant
branch
$ 11, 250 $3, 754 $ 22, 500 $ 37, 500 $75, 000
manager
salary
Branch
manager $ 4, 000 $ 8, 000 $68, 000 $ 80, 000
salary
total $ 23, 250 $ 107, 754 $ 62, 500 $ 121, 500 $ 315, 000

EXERCISE 8-11
ACTIVITY TOTAL COST TOTAL ACTIVITY ACTIVITY RATE
Opening account $ 23, 250 500 $ 46. 50
Processing deposits& $ 107, 754 100, 000 $ 1. 08
withdrawals

Processing other $ 62, 500 5, 000 $ 12. 50
customer transactions

ITEM ABC COST LOWEST COST
Opening account $ 46. 50 > $ 26. 75
Processing deposits & $ 1. 08 < $ 1. 24
withdrawals
Processing other customer $ 12. 50 > $ 11. 86
transaction

Kos membuka akaun adalah lbh mrh pd masa kini, ini kerana untuk menarik pelanggang agar
melabur di bank mereka.
Kos membuka akaun lebih tinggi, mungkin kadarnya yang slebih itu di serapkan pada bahagian
prosesnya.
EXERCISE 8-12
Overhead cost:
ACTIVITY COST
ACTIVITY RATE ACTIVITY ABC COST
POOLS
Order size $ 16. 85/DLH 200 DLH $ 3, 370
Customer order $320/customer order - $ 320
Product testing $ 89/testing hour 4 hour product testing $ 356
Selling $ 1, 090/sales call 2 sales calls $ 2, 180
Total overhead cost $ 6, 226

EXERCISE 8-18
First- stage allocation of overhead cost to the activity cost pools:
ITEM VOLUME ORDER CUSTOMER OTHER TOTAL
RELATED RELATED SUPPORT
Wages & $ 120, 000 $ 90, 000 $ 60, 000 $ 30, 000 $ 300, 000
salaries
Other $ 30, 000 $ 10, 000 $ 20, 000 $ 40, 000 $ 100, 000
overhead cost
total $ 150, 000 $ 100, 000 $ 80, 000 $ 70, 000 $ 400, 000

Activity rate for the activity cost pools are :
ITEM TOTAL COST TOTAL ACTIVITY ACTIVITY RATE
Volume related $ 150, 000 20, 000 DLH $ 7.50
Order related $ 100, 000 400 order $ 250
Customer support $ 80, 000 200 customer $ 400
other $ 70, 000 Not applicable Not applicable

Customer margin- ABC
Sales $ 3000
Costs :
Direct material $ 1, 800
Direct labor $ 100
Volume related $ 7. 50
Order related $ 250
Customer support $ 400 ( 2, 557. 50)
Customer margin $ 442. 50

Overhead cost for the order from Shenzhen enterprise :
ACTIVITY COST ACTIVITY RATE ACTIVITY ABC COST
POOLS
Volume related $ 7. 50/ DLH 20, 000 $ 150, 000
Order related $ 250/ order 400 $ 100, 000
Customer support $ 400/ customer 200 $ 80, 000