Accounting Question No ABC1 On Activity-Based Costing
Company XYZ has 2 fixed price contract for 2 different customers.The company has enough capacity for both contracts but is uncertain whether they will be profitable.
Data as follows:
|
Customer |
AAA |
BBB |
|
Component Type |
A999 |
B999 |
|
Contract Value($) |
$27,000 |
$100,000 |
|
Contract Quantity |
1,000 unit |
2,000 units |
|
Material cost/unit |
$15 |
$20 |
|
Moulding time/batch |
5 hours |
7.5 hours |
|
Batch Size |
100 units |
50 units |
Annual Budgeted overheads as follows:
|
Activity |
Cost Driver |
Cost driver volume/yr |
Cost pool |
|
Moulding |
Moulding hours |
2,000 |
$150,000 |
|
Inspection |
Batches |
150 |
$75,000 |
|
Production Management |
Contracts |
20 |
$125,000 |
Required:
(a) Calculate the activity based costs and profits for each contract
(b) Calculate the profit for each job using Absorption costing. Absorb overheads using moulding hours.
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November 23, 2007
Tags: activity based costing, Activity based costing questions
Posted in: Activity-Based Costing
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Answer To Accounting Test Question No. 1 On Activity Based Costing | FMAccounting - November 23, 2007
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