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.
- Answer To Accounting Test Question No. 1 On Activity Based Costing
- Management Accounting Question ABC No2 On Activity Based Costing
- Answer To Management Accounting Question No:ABC2 on Activity Based Costing
- Activity Based System Question No 4 (with answer)
- Activity Based Costing Question No.5 (with answer)
- Steps In Implementing Activity-Based Costing System(ABC):
- What is Activity-Based Costing System?
FCCA,CA(MIA)with more than 26 years of post-qualifying working experiences. Previous working stints with one of the big accounting four,Regional GFC & Group Treasurer in a group of Malaysian and Group CFO in Singapore public listed concern.Also author to another very popular free educational accounting cum finance blog:http://basiccollegeaccounting.com under the branding of College Accounting Coach.
[...] Refer to Accounting Test Question No.1 [...]
[...] ABC 1 TrackBack URI [...]