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Ab Soundscape ABC
Ab Soundscape ABC
AB Soundscape now wants to use ABC-costing. They think about what activities are
carried out in the company and how they are connected to the two speaker parts. They
compiled additional information. (They still use the budgeted volumes of 200 000
standard parts and 50 000 customised parts). First, there is information regarding the
indirect costs related to production. Production was carried out in batches of 1000 parts
(standard part) and 100 parts (customised part). This means a total of 200 batches of
standard and 500 batches of customised parts. 1 set-up and 10 quality inspections
occurred for each batch. In addition, each batch of standard parts required 10 material
movements and each batch of customised parts 30 movements. The standard parts
required 20 000 purchase orders and the customised parts required 30 000 orders.
Finally, there were 100 maintenance call-outs for the standard and 100 maintenance
call-outs for the customised parts.
Sum indirect
costs
Per unit
Thereafter the company looked for information regarding the indirect costs that are
unrelated to production. The standard part required 200 sales visits, 60 000 delivery
miles and 200 customer support visits. The customized part required 300 sales visits,
90 000 delivery miles and 400 customer support visits.
Per unit
Calculate the total cost per unit for the two products, allocation the indirect costs (production
overhead and selling and administrative) based on the activity information provided.
How does the cost differ compared to the product cost calculated using full costing earlier?