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  • Exhibit 8.6 ABC Model Computation of Activity Rate

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    Salman John
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    The document shows an example of using activity-based costing (ABC) to assign overhead costs to different products. It lists activity cost pools and activity rates. It then calculates the ABC cost for standard stanchions and a custom compass housing by multiplying the activity rates by the quantity of activities used. The total overhead costs assigned are $524,500 for stanchions and $427,500 for the compass housing, with $858,000 remaining unassigned to customer relations and other activities.

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    The document shows an example of using activity-based costing (ABC) to assign overhead costs to different products. It lists activity cost pools and activity rates. It then calculates the ABC cost for standard stanchions and a custom compass housing by multiplying the activity rates by the quantity of activities used. The total overhead costs assigned are $524,500 for stanchions and $427,500 for the compass housing, with $858,000 remaining unassigned to customer relations and other activities.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xls, pdf, or txt
    5 views3 pages

    Exhibit 8.6 ABC Model Computation of Activity Rate

    Uploaded by

    Salman John
    The document shows an example of using activity-based costing (ABC) to assign overhead costs to different products. It lists activity cost pools and activity rates. It then calculates the ABC cost for standard stanchions and a custom compass housing by multiplying the activity rates by the quantity of activities used. The total overhead costs assigned are $524,500 for stanchions and $427,500 for the compass housing, with $858,000 remaining unassigned to customer relations and other activities.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xls, pdf, or txt
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    Activity cost pools Customer orders Product design Order size Customer relations Others

    Exhibit 8.6 ABC model computation of activity rate a b Total cost Total activity 320000 1000 orders 252000 400 designs 380000 20000 MHS 367500 250 customers 490500

    a+b Activity rate 320 per order 630 per design $19 per MHS $1.470 per sudtomer

    Exhibit 8.8 Assigning overhead costs to products. overhead cost for the standard stanchions axb a b Activity cost pools Activity Rate Activity ABC cost customer orders $320 per order 600 orders $192,000 product design $630 per design 0 designs 0 order size $19 per MH 17500 MHs 332500 total $524,500 overhead cost for the custom compass housing a b axb Activity cost pools Activity Rate Activity ABC cost customer orders $320 per order 400 orders $128,000 product design $630 per design 400 designs 252000 order size $19 per MH 2500 MHs 47500 total $427,500

    Over head cost assigned to products Standard Stanchui ons $192,000 0 332500 $524,500 custom compass housing total $128,000 $320,000 252000 252000 47500 380000 $427,500 952000

    customer orders product design order size subtotal

    overhead costs not assigned to products customer relations 367500 others 490500 subtotal 858000 total overhead cost 1810000

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