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8/9/2019 Practice Examples ABC
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(#peratin$ inco&e-Revenue)
1,3 555 ,17 555
Comparision
Traditional A!C
res. roduce 7,17% 0,60%
aca$ed ood 3,30% !,7%
Soft /rins 1,70% 10,7!%
Resource Cate$orisation
Soft Drink Fresh Produce
Revenue (%) 14,33 1,1!
Cost of Goods Sold (%) 20,00 0,00
"ottle Return Cost (%) 100,00 0,00
#rderin$ Costs (%) 23,0! 3,!
/eliver Costs (%) 4,2 64,2
Self Stocin$ Costs (%) 6,2 62,0
Custo&er Support Costs (%) !,20 71,!!
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Packaged Food Total!34600 1616000
3600000 12000000
10!0000 3600000
6!0000 1600000
14600 !16000
3,30 ,47
Cost allocation !ase Allocation "ate
624 purchase orders 1000 Per purchase orders
1260 deliveries !00 Per deliveries
200Per stocking hour
6,14,400 items sold 2 Per items sold
Packaged Food Total
!34600 1616000
3600000 12000000
0 !000
1000 62000
211200 100!000
216000 641200
2!00 122!!00
16000 1600000
23600 !16000
+.*- .*
3456 hours of self stockingtime
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,!4 555 ,3
Packaged Food
24,!
30,00
0,00
23,0!
20,4
31,2
14,42
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Total /istriution Cost
Total Cases of ri&iu& and Re$ular 8ine S.ipped
/istriution cost per case under e9istin$ sste&
/istriution Costs Re$ular
Total er Case
26000 10,6
Re$ular
articulars Total er Case
Deliver Costs
Rs, ! 9 2:0:000 1420000 !
rdering Costs
Rs, 600 9 10 orders 9 10 distriutors 60000 0,2
Promotion Costs
Rs, 16:000 9 10 distriutors 160:000 0,67
Total Costs 2:10:000 4
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:260:000
00000
10,6
re&iu&
Total er Case
170000 10,6
re&iu&
Total er Case
Rs, ! 9 1:60:000 12!0000 !
Rs, 600 9 20 orders 9 30 distriutors 360000 2,2
Rs, 16:000 ; 30 distriutors !0:000 3
2:120:000 13
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Activity
Activity Costs $
Machine setups 425,000
Purchase ordering 10,000Machining 6,000,000
Inspection 36,000
Packing and shipping 64,000
6,535,000
Activity
Activity Rate
Machine setups 65.38
Purchase ordering 100
Machining 80
Inspection 30
Packing and shipping 40
K33
Direct ateria! cost "30.00
Direct !a#or cost 24
$upport cost 8.3%
&nit cost "62.3%
The direct material cost and direct labor cost are obviousl much highe
!! result fro& t.e relative
The compan can consider the trade$offs in running !"" in larger
%unning larger batches &ould reduce the number of machine setup
The compan should reali'e, ho&ever, that such operational changes mi
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Activity Cost
Activity Practical Driver
Cost Driver Capacity Rate $
$etup hours 6,5006,3!
'u#er o( orders 100 100,00Machine hours %5,000 !0,00
'u#er o( #atches 1,200 30,00'u#er o( shipents 1,600 0,00
Cost Driver Units Cost A
)33 )88 )33
2,000 4,200 130%60
25 50 2500
40,000 15,000 3200000
400 600 12000
80 1,500 3200
*ota! 3,348,460
Per &nit 8.3%
K88
"45.00
60
10.38
"115.38
r for !"" than for !33#
sts are t.e sa&e per unit for ot. products: ut t.e ot.er support c
l lar$e nu&er of &ac.ine setups: purc.ase orders: inspe
batches and possibl maintaining larger inventories#
and inspections, and possibl the number of purchase orders#
ht not provide immediate financial improvements if capacit for these activities
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ssigned to
)88
2%45+6
5000
1200000
18000
60000
155%5+6
10.38
sts are t.ree to four ti&es .i$.er per unit for >!! t.an for >33,
ctions (atc.es):and s.ip&ents,
remains the same if not used profitabl#
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