ACC 406 Lecture Notes - Lecture 6: Resource Consumption, Activity-Based Costing, Deutsche Luft Hansa
19 Dec 2017
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We are getting better and better results. Note: the use of (cid:858)u(cid:374)it le(cid:448)el dri(cid:448)ers(cid:859) i(cid:374) (cid:271)oth depart(cid:373)e(cid:374)ts: unit level drivers are based on volume of output (e. g. units) Standard model widget: company normally produces 10,000 units, prime costs are /unit, one unit requires 0. 5 dlh in assembly department & 3. 5 mh in finishing department. Deluxe model widget: company normally produces 2,500 units, prime costs are /per unit, one unit requires 4 dlh in assembly & 2. 8 mh in finishing. First, we assumed the company uses a plantwide oh rate, based on units of production. This oh application rate would be: ,000/12,500 units = . 60/unit. But depart(cid:373)e(cid:374)tal rates (cid:449)ould (cid:373)ore a(cid:272)(cid:272)urately (cid:272)apture the oh costs that each produ(cid:272)t a(cid:272)tually (cid:858)(cid:272)o(cid:374)su(cid:373)es(cid:859) Departmental oh rates: assembly rate: ,000/15,000 dlh = /dlh, finishing rate: ,000/42,000 mh = . 19/mh. Oh cost of standard widget: dlh x /dlh = . 00, 3. 5 mh x . 19/mh = . 17, product cost of a: prime + . 17 = . 17.
