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    Book 1

    Uploaded by

    Hammad Misbah
    The document provides cost and production information for Classic Pen Company. It includes details on activity costs like handling production runs and machine set up, costs by product like Blue and Black pens, an income statement, and additional cost breakdowns by activity for Red and Purple pens. The key information is the cost per unit for each product using traditional and ABC costing methods, with ABC costing showing a more accurate unit cost.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd

    Book 1

    Uploaded by

    Hammad Misbah
    25 views4 pages
    The document provides cost and production information for Classic Pen Company. It includes details on activity costs like handling production runs and machine set up, costs by product like Blue and Black pens, an income statement, and additional cost breakdowns by activity for Red and Purple pens. The key information is the cost per unit for each product using traditional and ABC costing methods, with ABC costing showing a more accurate unit cost.

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    Book1

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    © © All Rights Reserved

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    The document provides cost and production information for Classic Pen Company. It includes details on activity costs like handling production runs and machine set up, costs by product like Blue and Black pens, an income statement, and additional cost breakdowns by activity for Red and Purple pens. The key information is the cost per unit for each product using traditional and ABC costing methods, with ABC costing showing a more accurate unit cost.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    25 views4 pages

    Book 1

    Uploaded by

    Hammad Misbah
    The document provides cost and production information for Classic Pen Company. It includes details on activity costs like handling production runs and machine set up, costs by product like Blue and Black pens, an income statement, and additional cost breakdowns by activity for Red and Purple pens. The key information is the cost per unit for each product using traditional and ABC costing methods, with ABC costing showing a more accurate unit cost.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 4

    Handling production runs Machine Set Up for changeover

    Cost
    Indirect Labor 50% 40%
    Fringe benefits (40%
    of Indirect Labor) 50% 40%
    Computer Systems 80%
    Machine Depreciation
    Machine Maintenance
    Energy
    Activity Expense $22,000.00 $11,200.00

    Machine Set Up for


    Activity Handling production runs changeover
    Cost Driver Production runs Setup Time
    Cost Driver Quantity 150 526
    Activity Cost Driver Rate
    $146.67 $21.29

    Cost Driver Blue Black

    Production Runs 50 50
    Set up time 200 50
    Products 1 1
    Machine Hours 5000 4000

    Classic Pen Company


    ABC Based Income Statement

    Blue Black
    Sales $75,000.00 $60,000.00
    Direct Material $25,000.00 $20,000.00
    Direct Labor $10,000.00 $8,000.00
    Fringe Benefits (Direct Labor $4,000.00 $3,200.00
    portion)
    Handling Production Runs $7,333.33 $7,333.33
    Machine Set up for $4,258.56 $1,064.64
    changeover
    Parts Administration $1,200.00 $1,200.00
    Running of Machines $7,000.00 $5,600.00
    Total Costs $58,791.89 $46,397.97
    Operating income $16,208.11 $13,602.03
    Return on Sales 21.61% 22.67%

    Blue Black
    ABC Cost per Unit $1.18 $1.16
    Traditional Cost per Unit $1.30 $1.30
    Selling Price $1.50 $1.50
    Parts Administration Running of machines Total Expense
    Total
    10% 100% $20,000.00

    10% 100% $8,000.00


    20% 100% $10,000.00
    100% 100% $8,000.00
    100% 100% $4,000.00
    100% 100% $2,000.00
    $4,800.00 $14,000.00 $52,000.00

    Parts Administration Running of machines


    No. of products Machine Hours
    4 10000

    $1,200.00 $1.40

    Red Purple Activity Cost Driver


    Rate
    38 12 $146.67
    228 48 $21.29
    1 1 $1,200.00
    900 100 $1.40

    Red Purple Total


    $13,950.00 $1,650.00 $150,600.00
    $4,680.00 $550.00 $50,230.00
    $1,800.00 $200.00 $20,000.00
    $720.00 $80.00 $8,000.00

    $5,573.33 $1,760.00 $22,000.00


    $4,854.75 $1,022.05 $11,200.00

    $1,200.00 $1,200.00 $4,800.00


    $1,260.00 $140.00 $14,000.00
    $20,088.09 $4,952.05 $130,230.00
    ($6,138.09) ($3,302.05) $20,370.00
    -44.00% -200.12% 13.53%

    Red Purple
    $2.23 $4.95
    $1.32 $1.35
    $1.55 $1.65

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