AcLlvlLy 8ased CosLlng

JaL ls A8C?
W ls a cosLlng sysLem LaL flrsL Lraces resource
consumpLlon cosL Lo acLlvlLles and Len Lo producLs
LaL consume acLlvlLles
W An octlvlty ln A8C ls an evenL LaL causes Le
consumpLlon of overead resource
W gseLLlng up maclnes
W AdmlLLlng paLlenLs Lo a osplLal
W 8llllng cusLomers eLc
W Alms Lo ldenLlfy and reduce producL cosL dlsLorLlons
LaL creep ln wlL Le use of convenLlonal cosLlng
evels of AcLlvlLles
W unlLlevel acLlvlLles LaL are performed eac Llme
a unlL ls produced
W 8aLclevel Lasks LaL are performed eac Llme a
baLc ls processed vlz seLLlng up maclnes
packlng slpmenLs Lo cusLomers lndependenL of
Le number of unlLs per baLc
W aclllLy level acLlvlLles LaL are carrled ouL
regardless of wlc producL ls produced or ow
many baLces are processed g facLory
managemenL salary lnsurance Laxes
uslng A8C Approac
W ComLek Sound makes 2 Lypes of radlos Cne wlL a bullLln Cu player called Cu
unlL lg sale value and Le oLer wlL a bullLln uvu player called uvu unlLlow
sale value 8oL are sold Lo auLomoblle manufacLurers ComLek as been loslng
blds Lo supply Cuu because rlvals ave quoLed less Lan ComLek or uvuu lL as
been wlnnlng every bld roducLlon managers suspecL cosL dlsLorLlons and a cross
funcLlonal Leam ls formed Lo develop an A8C sysLem Lo more accuraLely asslgn
overead cosLs Lo Le Lwo unlLs
teks boslc cstloq Joto ls qlveo bel
1C1AL DIkLC1
LA8Ck nCUkS
S00000
DVD un|ts S0000
u x 2 DLn]u 100000
Cu unlLs 200000u
x 2 u$u 400000
ul8C1
MA18lA CosL
uvuu $90$u
Cuu $30$u
ul8C1 A8C8
CosL
[$10$u
uvuu and Cdu $20 eac
ComLek esLlmaLed ManufacLurlng
overead cosL for year$1crore and as
used u Lo allocaLe overead cosLs
uslng A8C Approac
W 1e Leam Len ldenLlfled 6 acLlvlLles Lo be lncluded ln Le new A8C sysLem and
apporLloned cosLs as glven below ComLek expecLs Lo compleLe 4000 seL ups ln
year ouL of wlc 000 wlll be uvuu and 1000Cuu
W lnd ouL Le acLlvlLy raLes C$ cosL$unlL for boL lLems and LoLal producL cosL for
uvuu and Cuu Compare Lese cosLs wlL cosLs under convenLlonal cosLlng and
summarlze your flndlngs
Act|v|t|es
Measures
Lst|mated
C]n Cost |n
5
DVD exp
act|v|ty
CD exp
act|v|ty
1ota|
abor our 800000 100000 400000 300000
Maclne relaLed 2100000 00000 700000 1000000
Maclne seLup 1600000 000 1000 4000
rod order 130000 800 400 1200
arLs admln 30000 40 00 700
Ceneral facLory 20000000 00000 700000 1000000
LoLal 1 crore