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  • Activity Based Costing Method: Overhead Expense Activities Performed Allocation Based On

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    I.E. Business School
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    The document outlines an activity based costing method for three products: Ice-Mint, Paan, and Elachi. It lists overhead expenses and their associated allocation bases. It then provides cost pools for each activity and the costs allocated to each product. Finally, it details various cost drivers for each product such as production volume, material costs, machine hours, and dispatch information that would be used to allocate activity costs to each product.

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    The document outlines an activity based costing method for three products: Ice-Mint, Paan, and Elachi. It lists overhead expenses and their associated allocation bases. It then provides cost pools for each activity and the costs allocated to each product. Finally, it details various cost drivers for each product such as production volume, material costs, machine hours, and dispatch information that would be used to allocate activity costs to each product.

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    © All Rights Reserved
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    Download as pptx, pdf, or txt
    20 views3 pages

    Activity Based Costing Method: Overhead Expense Activities Performed Allocation Based On

    Uploaded by

    I.E. Business School
    The document outlines an activity based costing method for three products: Ice-Mint, Paan, and Elachi. It lists overhead expenses and their associated allocation bases. It then provides cost pools for each activity and the costs allocated to each product. Finally, it details various cost drivers for each product such as production volume, material costs, machine hours, and dispatch information that would be used to allocate activity costs to each product.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 3

    Activity Based Costing Method

    Overhead Expense Activities performed Allocation Based on

    Storekeepers salary 80% in handling raw material Direct Material


    20% in administration work
    Supervisors Salary 60% in supervising Labour Hours
    40% in insurance related work
    Insurance No of Machines

    Indirect Labour 70% in purchasing raw materials Labour Hours


    30% in logistics
    Quality Control Inspector's Salary No of batches/product inspected

    Transportation No of batches dispatched

    Other overheads(power+maintainence) No of machine hours


    Cost Activity Pool
    Activity Ice-Mint Paan Elachi

    Handling of raw materials 15904.84282 10919.28632 9175.870858

    Administration work 3976.210705 2729.82158 2293.967715

    Supervision 2421.286031 7962.305987 10616.40798

    Purchasing of materials 6774.193548 15241.93548 30483.87097

    Quality Inspection 6400 14400 19200

    Transportation 8720.930233 31395.34884 34883.72093

    Insurance related work 1614.190687 5308.203991 7077.605322

    Logictics related work 2903.225806 6532.258065 13064.51613


    Costs and Activity Cost Drivers

      Ice-Mint Paan Elachi


    Production sales volume 6500 7875 8100

    Selling price/box 25 40 45
    Material Cost/batch 1560 476 600

    No of machines/batch 4 4 5
    Labour Hours/Batch 13 19 19
    Machine Hours/Batch 8 8 12

    Set-up time ( hrs/batch) 5 7 4


    No of batches/day 20 45 60
    Total Set-up time 100 315 240
    Wage-rate for setup (hour) 20 100 100
    No of dispatches/day 5 18 20

    Wage rate - run time (per hour) 150 150 150

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