A Al Azian Refineries was established in the year 2015 and Mr. Imran is the founder of the company. It is planning to introduce ABC method of costing to refine its existing system of costing. The details of various costs involved is given below Cost Pool Amount-OMR Engineering 65000 Setups 54000 Labor 50000 Inspection 40000 Factory lease 10000 Factory utilities 30000 Advertising 20000 18000 Demand Creation 20000 Maintenance of 40000 The following cost drivers and their capacities have been identified Activity driver Practical Capacity Labor hours 4500 Setup hours 2700 Engineering hours 1300 Inspection hours 1700 Machine hours 7000 Number of employees 550 Percentage increase 9000 The cost of the facility-level activities is assigned using machine hours. You are required to create homogeneous cost pools Identity the activities that belong to each pool and the activity driver that will be used for computing pool rates (5 Marks B. Mr.Imran, the founder of Al Azlan Refineries wants to introduce a new software to control the operations and reporting system of the company Already the company was usinga system of reporting from its inception Suggest Mr Imran the various costs the should consider before introducing a new system of operations by following the Life Cycle method of costing with suitable examples (5 Marks) A Al Azian Refineries was established in the year 2015 and Mr. Imran is the founder of the company. It is planning to introduce ABC method of costing to refine its existing system of costing. The details of various costs involved is given below Cost Pool Amount-OMR Engineering 65000 Setups 54000 Labor 50000 Inspection 40000 Factory lease 10000 Factory utilities 30000 Advertising 20000 18000 Demand Creation 20000 Maintenance of 40000 The following cost drivers and their capacities have been identified Activity driver Practical Capacity Labor hours 4500 Setup hours 2700 Engineering hours 1300 Inspection hours 1700 Machine hours 7000 Number of employees 550 Percentage increase 9000 The cost of the facility-level activities is assigned using machine hours. You are required to create homogeneous cost pools Identity the activities that belong to each pool and the activity driver that will be used for computing pool rates (5 Marks B. Mr.Imran, the founder of Al Azlan Refineries wants to introduce a new software to control the operations and reporting system of the company Already the company was usinga system of reporting from its inception Suggest Mr Imran the various costs the should consider before introducing a new system of operations by following the Life Cycle method of costing with suitable examples
