=+6-36 KK Activity-based costing, job-costing system OBJECTIVES 5, 7 The Keyed-In (KI) plant in Melbourne operates at

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=+6-36 KK Activity-based costing, job-costing system OBJECTIVES 5, 7 The Keyed-In (KI) plant in Melbourne operates at capacity and assembles and tests printed-circuit (PC) boards. The job-costing system at this plant has two direct cost categories (direct materials and direct manufacturing labour) and seven indirect cost pools. These indirect cost pools represent the seven activity areas that operating personnel at the plant determined are sufficiently different (in terms of cost behaviour patterns or individual products being assembled) to warrant separate cost pools. The cost-allocation base chosen for each activity area is the cost driver at that activity area.

Chapter 6: Activity-based costing and activity-based management 249 M06_HORN3377_02_LT_C06.indd 249 2/09/13 3:26 PM Amy Clark, a newly appointed marketing manager at KI, is attending a training session that describes how an activity-based costing approach was used to design the Melbourne plant’s job-costing system. Clark is provided with the following incomplete information for a specific job (an order for a single PC board, no. A82):

Direct materials $75.00 Direct manufacturing labour 15.00 $90.00 Manufacturing overhead (see below) ?

Total manufacturing cost $?

Manufacturing overhead cost pool Cost-allocation base Cost-allocation rate Units of costallocation base used on job no. A82 Manufacturing overhead allocated to job 1 Axial insertion Axial insertions 0.08 45 ?

2 Dip insertion Dip insertions 0.25 ? 6.00 3 Manual insertion Manual insertions ? 11 5.50 4 Wave solder Boards soldered 3.50 ? 3.50 5 Backload Backload insertions ? 6 4.20 6 Test Budgeted time that board is in test activity 90.00 0.25 ?

7 Defect analysis Budgeted time for defect analysis and repair ? 0.10 8.00 Required 1 Prepare an overview diagram of the activity-based job-costing system at the Melbourne plant.

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Cost Accounting A Managerial Emphasis

ISBN: 9781442563377

2nd Edition

Authors: Monte Wynder, Madhav V. Rajan, Srikant M. Datar, Charles T. Horngren, William Maguire, Rebecca Tan

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