Management Accounting Question ABC No2 On Activity Based Costing

Company XYZ has 6 standard products from stainless steel and brass.The company’s most popular product is Product XX.   

The following are Product XX’s data for next year budget:

Activity Cost Driver Cost driver volume/yr Cost pool
Purchasing Purchase orders 1,500 $75,000
Setting Batches produced  2,800  $112,000

Materials handling

Materials movements

 8,000

 $96,000

Inspection

Batches produced

 2,800

 $70,000

Machining costs Machine hours  50,000  $150,000

 

Purchase orders 25
Output 15,000 units
Production batch size 100 units
Materials movements per batch 6
Machine hours per unit 0.1

Required:

(a) Calculate the budgeted overhead costs using activity based costing principles

(b) Calculate the budgeted overhead costs using absorption costing (absorb overhead using machine hours)

(c) How can the company reduce the ABC for Product XX

[Refer Answer]

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November 23, 2007  Tags: Activity based costing questions  Posted in: Activity-Based Costing

2 Responses

  1. Answer To Management Accounting Question No:ABC2 on Activity Based Costing | FMAccounting - November 23, 2007

    [...] Refer to Accounting Test Question No.ABC2 [...]

  2. Management Accounting Test Question On Activity Based Costing | Basic College Accounting.com - November 30, 2007

    [...] ABC 1    ABC2 [...]

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