ACTIVITY BASED COST MODEL FOR CLASSIC PEN COM

Particulars Cost driver Total

Indirect Labour
Production Run (50%) 10000
Setup Time (40%) 8000
Parts Administration (10%) 2000
Direct Labor 20000
Total Labour Expenses 40000
Fringe Benefits (40%) Total Labour Expenses 16000
Computer Systems Production Run (80%) 8000
Parts Administration( 20%) 2000
Machinery, Maintenance
& Energy Machine Hours 14000
Material Cost 50230
Total Manufacturing Cost
Total Units Produced
Per Unit cost of Production
25% margin on cost
Selling Price per Unit
OST MODEL FOR CLASSIC PEN COMPANY
Cost per cost driver Blue Black Red Purple

66.67 3333.33 3333.33 2533.33 800

15.21 3041.83 760.46 3467.68 730.04
500 500 500 500 500
10000 8000 1800 200
16875.16 12593.79 8301.01 2230.04
6750.06 5037.52 3320.41 892.02
53.33 2666.67 2666.67 2026.67 640
500 500 500 500 500

1.4 7000 5600 1260 140

25000 20000 4680 550
Total Manufacturing Cost 58791.89 46397.97 20088.09 4952.05
Total Units Produced 50000 40000 9000 1000
Per Unit cost of Production 1.18 1.16 2.23 4.95
25% margin on cost 0.29 0.29 0.56 1.24
Selling Price per Unit 1.47 1.45 2.79 6.19
RETURN ON SALES 21.60% 22.70% -44.00% -200%
 PARTICULARS COST POOL

INDIRECT LABOUR PRODUCTION RUN (50%)

SET-UP TIME (40%)
MAINTAINING RECORDS(10%)

COMPUTER SYSTEM PRODUTION RUN (80%)

PART ADMINISTRATION(20%)

MACHINE,MAINTANENE& ENERGY MACHINE HOURS/UNITS

BUDGETED AMOUNT COST DRIVERS BUDGETED VOLUME

10000 No. of production runs 150

8000 No. of set-up times 526
2000 No. of parts administration 4

8000 No. of production run 150

2000 No. of parts administration 4

14000 No.of machine hours 10000

RATE

66.66
15.2
500

53.3
500

1.4