Ice-Mint Paan Elaichi

Pellets per box 20 20 10

Pellets per batch 15000 12000 8000
No of batches manufactured / sold 20 45 30
No of boxes per batch 325 175 270
Selling price per box (Rs) 25 40 45
No of Dispatches(lorries) 5 18 20
Raw Material
Special ingredients Mint Extract Paan extract Cardomom

Total other ingredients required 3 3 5

Cost of special ingredients (per batch) 1400 188 120
Cost of other ingredients (per batch) 160 288 480
Material Cost (per batch) 1560 476 600

Labor
Setup time in hrs (per batch) 5 7 4
Run time in hrs (per batch) 8 12 15
Total time in hrs (per batch) 13 19 19

Wage rate - Setup time (per hour) 20 100 100

Wage rate - run time (per hour) 150 150 150
No of machines 4 5 6
Machine hours (per batch) 8 8 12
Total Machine Hours 160 360 360
total labour hours 260 855 570
%of machine hours 0.181818181818182 0.4090909091 0.40909090909091

Overhead Expenses for April

Storekeeper's salary 45,000
Supervisor's salary 35,000
Insurance 20,000
Quality Control Inspector 40,000
Indirect Labour 75,000
Power 55,000
Maintainence Expenses 125000
Transportation 75,000
470,000

Other Overhead Cost 370,000

Overhead Cost Based on direct material 80,000
Insurance 20,000
 Ice-Mint Paan Elaichi
Direct Material 31200 21420 18000
Direct Labour 24000 54000 54000
Set Up Cost 2000 31500 12000

Overheads-Storekeepers salary
Handling of raw materials-80%
36000 9750.53456878118 10853.884533 15395.5808980756
Administration work(Documentation etc)-20%
9000 2437.6336421953 2713.4711333 3848.89522451889

Overheads-Supervisors Salary
Supervision-60% 2421.28603104213 7962.3059867 10616.4079822616
Administration work-40% 1614.19068736142 5308.2039911 7077.60532150776

Overheads-Insurance 5333.33333333333 6666.6666667 8000

Overheads-Indirect Labour
Purchasing-70% 8100.89020771513 26639.465875 17759.6439169139
Logistics-30% 3471.81008902077 11416.913947 7611.27596439169

Overheads-Quality Control 6400 14400 19200

Overheads-Transportation 8720.93023255814 31395.348837 34883.7209302326

Other overheads(power+maintainence) 23225.8064516129 52258.064516 104516.129032258

Total Cost 128676.41524362 276534.32549 312909.25927016

Total Sales 162500 315000 364500

Profitability 20.8145136962337 12.211325242 14.1538383346612

Calculation
Storekeeprs Salary
Handling of raw materials
36000 15904.8428207307 10919.286321 9175.87085811385
Administration work(Documentationetc)
9000 3976.21070518267 2729.8215803 2293.96771452846

Supervisors Salary
Total labour hours 260 855 1140
Based on labour hours 4035.47671840355 13270.509978 17694.0133037694

Supervision-60% 2421.28603104213 7962.3059867 10616.4079822616

Insurance related work(40%) 1614.19068736142 5308.2039911 7077.60532150776

Quality Inspector
No of batches manufactured / sold 20 45 60
Cost 6400 14400 19200

Transportation
No of dispatches 5 18 20
Cost 8720.93023255814 31395.348837 34883.7209302326

Indirect labour 260 855 570

0.154302670623145 0.5074183976 0.33827893175074
11572.7002967359 38056.379822 25370.9198813056

Purchasing-70% 8100.89020771513 26639.465875 17759.6439169139

Logistics-30% 3471.81008902077 11416.913947 7611.27596439169

Other overheads(power+maintainence) 32727.2727272727 73636.363636 60890.2077151335

Traditional Costing Method

Ice-Mint Paan Elachi

Sales 162500 315000 364500
Direct Materials 23540 23540 23540
Direct Labour 44000 44000 44000
Set up cost 15166.6666666667 15166.666667 15166.6666666667
Overheads 156666.666666667 156666.66667 156666.666666667
Insurance 6666.66666666667 6666.6666667 6666.66666666667
Total operating income -83540 68960 118460

Profit% -51.4092307692308 21.892063492 32.4993141289438

Cost Drivers and Cost Driver Rate

Ice-Mint Paan Elachi
Production sales volume 6500 7875 8100
Selling price/box 25 40 45
Material Cost/batch 1560 476 600
No of machines/batch 4 4 5
Labour Hours/Batch 13 19 19
Machine Hours/Batch 8 8 12
Set-up time ( hrs/batch) 5 7 4
No of batches/day 20 45 60
Total Set-up time 100 315 240
Wage-rate for setup (hour) 20 100 100
No of dispatches/day 5 18 20
Wage rate - run time (per hour) 150 150 150

Insurance 20,000
No of machines 4 5

insurance
Ice-Mint Paan Elachi
5333.33333333333 6666.6666667 8000

Cost Activity Pool

Activity Ice-Mint Paan Elachi
Handling of raw materials 15904.8428207307 10919.286321 9175.87085811385
Administration work 3976.21070518267 2729.8215803 2293.96771452846
Supervision 2421.28603104213 7962.3059867 10616.4079822616
Purchasing of materials 8100.89020771513 26639.465875 17759.6439169139
Quality Inspection 6400 14400 19200
Transportation 8720.93023255814 31395.348837 34883.7209302326
Insurance related work 1614.19068736142 5308.2039911 7077.60532150776
Logictics related work 3471.81008902077 11416.913947 7611.27596439169
Traditional Costing Method vs ABC Costing

8125

ABC Costing Method

 70620
132000
45500
 Electricity charges
Maintenance Expenses
Indirect Cost

Other maintainence

450000

Total
22475
 655

6
 55,000
125000
75,000
255,000

180,000