Cost Management Systems: Activity-Based, Just-In-Time, and Quality Management Chapter 19 Exercises.

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Presentation transcript:

Cost Management Systems: Activity-Based, Just-In-Time, and Quality Management Chapter 19 Exercises

Activity Based Costing In-Class Exercises (Form groups and work exercise): Exercise No. Page E19-1 Handout Activity-Based Costing (Use the format, as reflected on the next chart, to begin this exercise)

Activity Based Costing Exercise 19-1 (See the next chart for the format to allocate costs)

Activity Based Costing Prepare 1 chart for Rounded Edge and 1 chart for Squared Edge shelving.

Activity Based Costing Exercise 21-2: Pane Company produces two types of glass shelving on the same production line. The company reports the following overhead information. Rounded Squared Edge Edge Total Overhead (300% of direct labor cost)…. $18,300 $35,700 $54,000 Exercise 19-1 Activity Cost Pool Cost Supervision…………………………………… $ 2,160 Depreciation of machinery………………… 28,840 Assembly line preparation…………………. 23,000 Total overhead……………………………….. $ 54,000 Cost Driver Information: Usage . Cost Category (ABC Pool) Driver Rounded Edge Squared Edge Total Supervision……………..………..D/L cost $ 6,100 $11,900 $18,000 Depreciation of machinery…….Machine hrs 300 hours 700 hours 1,000 hours Assemble line preparation…....Setups (No.) 31 times 94 times 125 times (1) Assign overhead cost pools to each of the two products using ABC. (2) Determine the average cost per foot for each of the two products using ABC.

Activity Based Costing Calculation of Overhead Rates

Activity Based Costing Exercise 19-1

Activity Based Costing Assignment of Costs - Rounded Edge Shelving

Activity Based Costing

Activity Based Costing Assignment of Costs - Squared Edge Shelving

Activity Based Costing Cost Pool

Activity Based Costing Average Cost per Foot - Both Products

Activity Based Costing Average cost per foot (current)…… $3.23 $4.91

Activity Based Costing End of Exercise

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