ACTIVITY BASED COSTING SYSTEMS AND ACTIVITY BASED MANAGEMENT

Model A Model B Model C Total
Unit produced 300 500 200 1000
Direct materials (per unit) $50 $75 $20
Direct labor (per unit) $20 $50 $40
Cost driver information:
number of parts (per unit) 20 42 30
direct labor hours (per unit) 3 4.6 4
square feet (in total for all units) 600 400 1,000
Overhead costs:
Labor Support $22,000
Materials Support $33,000
Facility Cost $90,000
Total overhead $145,000

Use activity-based costing to calculate the total cost for each Model Cheater. Allocate Labor Support using direct labor hours, Materials Support using number of parts, and Facility Cost using square feet.

The total costs of Model A, B and C are $57,567.57,$ 115,175.68  and  $67,756.76  respectively.

However,cost per unit of Models are highlighted below:

Model A $50

Model B $75

Model C $20

Explanation:

In calculating the total costs of models using activity-based costing system and activity based management, I multiplied the quantities by labor cost per unit and material cost per unit in order to arrive at total material costs and total labor costs.

However, in calculating overheads  I multiplied direct labor hour per unit by the total quantity of product produced,then summed to together all labor hours to arrive total labor hours for all models with which I then shared the labor support overhead between the models.I repeated the same exercise for material support overhead as well.

Lastly, I added together all square feet ,then apportioned the facility to models based on each model's square feet divided by total square feet.

Find attached for detailed calculation.

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