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Activity Based Costing System

This document contains an activity-based costing analysis comparing the costs of flexible and rigid production models. It shows the estimated activity costs and overhead pools for various activities like purchase orders, rework requests, product testing, and machine-related costs. The total estimated activity costs are calculated to be $600,000. The analysis then calculates the amount of overhead allocated to each cost pool and activity type. Based on this, the total cost per unit is calculated to be $373 for flexible production and $111.70 for rigid production, demonstrating that the flexible model has a higher per unit cost.

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Kim Patrick Victoria
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87 views1 page

Activity Based Costing System

This document contains an activity-based costing analysis comparing the costs of flexible and rigid production models. It shows the estimated activity costs and overhead pools for various activities like purchase orders, rework requests, product testing, and machine-related costs. The total estimated activity costs are calculated to be $600,000. The analysis then calculates the amount of overhead allocated to each cost pool and activity type. Based on this, the total cost per unit is calculated to be $373 for flexible production and $111.70 for rigid production, demonstrating that the flexible model has a higher per unit cost.

Uploaded by

Kim Patrick Victoria
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Victoria, Kim Patrick C.

BA 504 – Management Accounting


Activity Based Costing System

Required:
1. Flexible – P 110.00+30.00+8.33 = P 148.33
Regular/Rigid – P 60+15+41.67 = P 116.67

2. Est im a t e d
A c t iv it y C o st
A c t iv it y C o st Po o l O v e rh e a d Exp e c t e d A c t iv it y
Po o l
C o st
Fle xib le Rig id To t a l Fle xib le Rig id
Pu rc h a se O rd e r 20,000.00 100 300 400 5,000.00 15,000.00
Re wo rk Re q u e st s 10,000.00 60 140 200 3,000.00 7,000.00
Pro d u c t Te st in g 210,000.00 900 1,200 2,100 90,000.00 120,000.00
Ma c h in e -re la t e d 360,000.00 1,500 2,500 4,000 135,000.00 225,000.00
600,000.00

3. Est im a t e d
A c t iv it y C o st Am o unt o f
A c t iv it y C o st Po o l O v e rh e a d
Po o l O v e rh e a d
C o st
Fle xib le Rig id Fle xib le Rig id
Pu rc h a se O rd e r 20,000.00 5,000.00 15,000.00 5.00 1.50
Re wo rk Re q u e st s 10,000.00 3,000.00 7,000.00 3.00 0.70
Pro d u c t Te st in g 210,000.00 90,000.00 120,000.00 90.00 12.00
Ma c h in e -re la t e d 360,000.00 135,000.00 225,000.00 135.00 22.50
600,000.00 233.00 36.70

Flexible – P 110.00+30.00+233.00 = P 373.00


Regular/Rigid – P 60+15+36.70 = P 111.70

4. The cost of production for the flexible model is too big in comparison with number of its unit
sold.

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