Activity

Warehousing (excl Personnel)

Freight
Delivery truck exp
Order entry exp

Order entry exp apport.

Manual cust order setup

Enter ind order lines
Validate an EDI order
Activity expense Cost driver Cost driver qty
2000000 No.of cartons 80000
450000 No. of cartons of non-desktop del 75000
200000 No. of cartons of desktop del 5000
800000 Data Entry operators time 10000

Time taken
2000
7500
500
Cost driver rate
25
6
40
80
Order entry exp apport.
Time taken Expenses
Manual cust order setup 2000 160000
Enter ind order lines 7500 600000
Validate an EDI order 500 40000
Cost driver Cost driver qty Cost driver rate
No. of manual orders 16000 10
No. of order lines 150000 4
No.of EDI orders 8000 5
Warehouse personnel
expenses app.

Activity Expense Cost driver

No. of cartons of
Desktop deliveries 240000 desk del
No of cartons of non-
Prep for non-desktop del 2160000 desk del
Cost driver qty Cost driver rate

5000 48

75000 28.8
 Customer A

Current
method
No. of cartons 200
Sales 103000
Cost of items 85000
Gross margin 18000

Warehousing
Personnel
Distribution Commercial freight
Order Entry
Total WH,Distr, Order costs 12750

Contr to Gen selling exp and Profit 5250

Interest exp 900

Net contr. To Gen Selling & Profit 4350

Customer A Customer B

Current
ABC Costing ABC Costing
method
200 200 200
103000 104000 104000
85000 85000 85000
18000 19000 19000

5000 5000
5760 6720
1200 2900
330 1720
12290 12750 16340

5710 6250 2660

900 3000 3000

4810 3250 -340

 Commercial
freight Dektop
Personnel
exp/carton 28.8 48
Delivery
cost/carton 6 40

Total
Dif

19.2

34

53.2