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  • BTVN Chap3 Lâm Thị Hiền Linh MSV 2012250042

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    Nguyễn Ngọc Hà My
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    Under ABC costing, unit product costs are calculated based on actual consumption of activities rather than using a general overhead rate. This leads to more accurate costing, as illustrated by the examples. Specifically: 1) For Company A, activity rates are calculated for different activities like labor, purchase orders, and testing. Using these rates, the MOH cost and unit cost is calculated separately for each product. 2) For Restaurant B, activity rates are determined for serving parties, dinners, and drinks. The cost is then calculated separately for different customer scenarios based on consumption of these activities. 3) Traditional costing uses a general overhead rate, so the unit product cost may not be exact. In

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    Under ABC costing, unit product costs are calculated based on actual consumption of activities rather than using a general overhead rate. This leads to more accurate costing, as illustrated by the examples. Specifically: 1) For Company A, activity rates are calculated for different activities like labor, purchase orders, and testing. Using these rates, the MOH cost and unit cost is calculated separately for each product. 2) For Restaurant B, activity rates are determined for serving parties, dinners, and drinks. The cost is then calculated separately for different customer scenarios based on consumption of these activities. 3) Traditional costing uses a general overhead rate, so the unit product cost may not be exact. In

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    7 views3 pages

    BTVN Chap3 Lâm Thị Hiền Linh MSV 2012250042

    Uploaded by

    Nguyễn Ngọc Hà My
    Under ABC costing, unit product costs are calculated based on actual consumption of activities rather than using a general overhead rate. This leads to more accurate costing, as illustrated by the examples. Specifically: 1) For Company A, activity rates are calculated for different activities like labor, purchase orders, and testing. Using these rates, the MOH cost and unit cost is calculated separately for each product. 2) For Restaurant B, activity rates are determined for serving parties, dinners, and drinks. The cost is then calculated separately for different customer scenarios based on consumption of these activities. 3) Traditional costing uses a general overhead rate, so the unit product cost may not be exact. In

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    of 3

    E3-11

    1. Activity rate
    Labor related: 18,000 : 2,000 = 9,000
    Purchase orders: 1,050 : 525 = 2
    Product testing: 3,500 : 350 = 10
    Template etching: 700 : 28 = 25
    General factory: 50,000 : 10,000 = 5
    2. MOH assigned to A: 9,000 x 500 + 2 x 80 + 10 x 200 + 25 x 0 + 5 x 3,400 = 4,519,160
    MOH assigned to B: 9,000 x 100 + 2 x 105 + 10 x 60 + 25 x14 + 5 x 2,200 = 912,160
    MOH assigned to C: 9,000 x 700 + 2 x 180 + 10 x 0 + 25 x 10 + 5 x 1,800 = 6,309,610
    MOH assigned to D: 9,000 x 700 + 2 x 160 + 10 x 90 + 25 x 4 + 5 x 2,600 = 6,314,320
    3. Under the conventional cost system, the overhead cost will be higher due to the fact that under
    this system, we use a general POHR for all product type. As the MOH of A, B and C product is
    much higher than B product, when using a general POHR, the MOH of B will increase as the
    MOH is calculated based on the general POHR.

    E3-10

    1. The POHR is: 2,200,000 : 110,000 = 20


    Total manufacturing cost of Xactive is:
    (64.8 + 18.2) x 25,000 + 1.4 x 25,000 x 20 = 2,775,000
    Unit product cost of Xactive is:
    2,775,000 : 25,000 = 111 ($)
    Total manufacturing cost of Pathbreaker is:
    (51 + 13) x 75,000 + 1 x 75,000 x 20 = 6,300,000
    Unit product cost of Pathbreaker is:
    6,300,000 : 75,000 = 84 ($)
    2. Activity rate

    Activity Cost Pool Total cost Total activity Activity rate


    Supporting direct labor 797,500 110,000 7.25
    Batch setup 680,000 400 1,700
    Product sustaining 650,000 2 325,000
    General factory 72,500 10,000 7.25
    3. The direct labor cost of Xactive is: 455,000
    The direct materials cost of Xactive is: 1,620,000
    MOH cost of Xactive is: 7.25 x 35,000 + 1,700 x 250 + 325,000 + 7.25 x 2,500 = 1,021,875
    Unit cost of Xactive is : 123.875

    The direct labor cost of Pathbreaker is: 975,000


    The direct material cost of Pathbreaker is: 3,825,000
    MOH cost of Pathbreaker is: 7.25 x 75,000 + 1,700 x 150 + 325,000 + 7.25 x 7,500 = 1,178,125
    Unit cost of Pathbreaker is: 79.71
    4. Because under the traditional costing, the unit product cost is calculated based on a general
    POHR, the result will not be exact. Under the ABC, however, the unit product cost of each
    product is calculated based on its own activity rate, the result will be more exact.

    E3-14A

    1. Activity rate
    Serving a party: 32,800 : 8,000 = 4.1
    Serving a dinner: 211,200 : 32,000 = 6.6
    Serving drinks: 69,600 : 58,000 = 1.2
    2. Serving cost
    a. A party of 4 diners who order 3 drinks: 4.1 + 6.6 x 4 + 1.2 x 3 = 34.1
    b. 1 party of 2 diners with 0 drink: 4.1 + 6.6 x 2 = 17.3
    c. 1 diner with 2 drinks: 6.6 + 1.2 x 2 = 9
    3. Average cost
    a. 34.1 : 4 = 8.525
    b. 17.3 : 2 = 8.65
    c. 9 : 1 = 9
    4. Cause there are differences in the number of diners and drinks for each party.

    E3-13A

    1. Classify
    a. Unit
    b. Unit
    c. Batch
    d. Facility
    e. Facility
    f. Facility
    g. Batch
    h. Batch
    i. Facility
    j. Product
    k. Facility
    2. Suggest
    a. Machine hours
    b. Inspection time
    c. Number of production orders
    d. None
    e. None
    f. None
    g. Number of purchase orders
    h. Number of material movements
    i. None
    j. Engineering time
    k. Setup time
    l. None

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