Question

The Pond Kit Company manufactures kits for fish ponds. The managers recently set up an ABC system to identify and reduce non-value-added activities. The ABC system includes the following cost pools, cost drivers, and estimated costs for manufacturing activities:

				Cost
		Cost		Allocation
Activity		Driver		Rate
Material handling		Number of parts		$	1		per part
Forming		Moulding hours			30		per hour
Moulding setup		Number of batches			40		per batch
Packing and shipping		Weight			1.30		per kg
Inspection		Finished kits			14		per kit
Direct labour		Finished kits			22		per kit
Direct materials		Finished kits			140		per kit

The company manufactures 14 kits per batch. Each kit requires 26 parts and 2 hours in moulding, and each weighs 38 kg.

Calculate the total ABC manufacturing cost per batch. (Round answer to 2 decimal places, e.g. 2,556.35.)

Total ABC manufacturing cost per batch

$

Calculate the total ABC cost per finished kit. (Round answer to 2 decimal places, e.g. 2,556.25.)

Total ABC cost per finished kit

$

Suppose that Pond Kit‘s managers also want to allocate marketing costs and customer service to each product. Total marketing costs for the period were $16,000, and customer service costs were $25,000. The number of batches produced was 1,100.

Calculate the total ABC cost per unit and cost per kit, including the costs of marketing and customer services. (Round answers to 2 decimal places, e.g. 2,556.25.)

		Cost			Cost per Kit
		Per Batch			(14 kits per batch)
Total		$			$

Answer 1

solution : cost per batch computation of manufacturing particulars lamount ($) 1960 308 196 691.6 Direct mateñal (14x140) Direct labor (14X22) Inspection (14x 14) packing & shipping (14x38x1.30) moulding setup forming (14x2230) material handling (14x 26X1) 40 840 364 cost per batch $ 439916 2) cost per kit - sost per batch Number of kits in. One batch $4399.6 - 314.25

computation finished kit services) of manufacturing cost per batch and (Including cost of marketing & Customer particulars Amount & 1960 308 196 691-6 Direct material 148 140 Direct labor (14x22) Inspection (14814) packing & shipping (14x3881:30) moulding setup fooming (14x2x 30) matenal handling (14x26x1) Material cost (16000/1100) customer service cost (25000/1100) uo quo 364 14.54 22-72 cost per batch 4436.86 14 Nos of Kits in one batch cost per hit 316.91