Activity-based job-costing system. The Calgary Company manufactures and sells packaging machines. It recently used an activity-based approach

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Activity-based job-costing system. The Calgary Company manufactures and sells packaging machines. It recently used an activity-based approach to refine the job costing system at its Calgary plant. The resulting job-costing system has one direct cost category (direct materials)

and four indirect manufacturing cost pools. These four indirect-cost pools and their allocation bases were chosen by a team of product designers, manufacturing personnel, and marketing personnel:

Indirect-Manufacturing Cost Pool Cost-Allocation Base Budgeted CostAllocation Rate 1. Materials-handling 2. Machining 3. Assembly 4. Inspection Component parts Machine-hours Assembly-line-hours Inspection-hours

$ 9.60 per part

$ 81.60 per hour

$ 90.00 per hour

$124.80 per hour Cola fiupreme recently purchased 50 can-packaging machines from the Calgary Company.

Each machine has direct materials costs of $3,600, and requires 50 component parts, 12 machine-hours, 15 assembly line-hours, and 4 inspection-hours.

Calgary’s prior costing system had one direct-cost category (direct materials) and one indirect-cost category (manufacturing overhead, allocated using assembly-line-hours).

Required 1. Present overview diagrams of the prior job-costing system and the refined activity-based job-costing system.

2. Compute the unit manufacturing costs (using ABC) of each machine and the total manu¬

facturing cost of the Cola $upreme job.

3. The activity-based job-costing system ofCalgary has only one manufacturing direct-cost cat¬

egory—direct materials. A competitor ofthe Calgary Company has two direct-cost categories at its manufacturing plant—direct materials and direct manufacturing labour. Why might Calgary not have a direct manufacturing labour costs category in its job-costing system?

Where are the manufacturing labour costs included in the Calgary costing system?

fk What information might members of the team that refined the prior costing system find useful in the activity-based job-costing system?

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Related Book For  book-img-for-question

Cost Accounting A Managerial Emphasis

ISBN: 9780131971905

4th Canadian Edition

Authors: Charles T. Horngren, George Foster, Srikant M. Datar, Howard D. Teall

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