calculation of product cost using traditional method

particulars widgets gadgets smidgets

Direct material $100,000.00 $200,000.00 $150,000.00
Direct labour $100,000.00 $300,000.00 $400,000.00
overhead $200,000.00 $600,000.00 $800,000.00
Total cost $400,000.00 $1,100,000.00 $1,350,000.00
% of total expenditure 10.81% 29.73% 36.49%

Calculation of acticity based overhead rates

Overhead cost Estimated amt Cost driver amt
Depreciation $300,000.00 3000
set-up $700,000.00 1000
rent $1,000,000.00 100000

particulars widgets gadgets smidgets

Direct material $100,000.00 $200,000.00 $150,000.00
Direct labour $100,000.00 $300,000.00 $400,000.00
Prime cost $200,000.00 $500,000.00 $550,000.00
Overheads
deprecition $50,000.00 $90,000.00 $40,000.00
cost driver : machine hr 500 900 400
set-up $140,000.00 $210,000.00 $70,000.00
cost driver : set-up hr 200 300 100
Rent $200,000.00 $300,000.00 $100,000.00
cost driver : sqft area 20000 30000 10000
Total cost $590,000.00 $1,100,000.00 $760,000.00
% on the total expenditure 15.95% 29.73% 20.54%
smadgets toatl
$250,000.00 $700,000.00
$200,000.00 $1,000,000.00
$400,000.00 $2,000,000.00
$850,000.00 $3,700,000.00
22.97%

Overhead rate/activit
$100.00 per hour
$700.00 per hour
$10.00 per .sq ft

smadgets toatl
$250,000.00 $700,000.00
$200,000.00 $1,000,000.00
$450,000.00 $1,700,000.00

$120,000.00 $300,000.00
1200 3000
$280,000.00 $700,000.00
400 1000
$400,000.00 $1,000,000.00
40000 100000
$1,250,000.00 $3,700,000.00
33.78%
HW prb Notes

Indirect cost Chairs Tables Wadrobes

cost : carriage inward /outwards 18000 27000 45000
cost driver : carpenter refreshment 400000 600000 1000000
cost : carpenter refeshment $5,600.00 $6,400.00 $8,000.00
cost driver : no of carpenters 7 8 10
cost : ind o / on manufact process 11666.6666667 11666.6666667 11666.66666667
cost driver :units manufactured 20000 20000 20000
cost : rent 16000 24000 40000
cost driver : sq ft area of wood 400000 600000 1000000
cost : depreciation 5600 6400 8000
cost driver : carpenters 7 8 10
Total $56,866.67 $75,466.67 $112,666.67
% 23.21% 30.80% 45.99%
total
90000
2000000
20000
25
35000
60000
80000
2000000
20000
25
$245,000.00