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A. Al Azlan Refineries was established in the year 2015 and Mr. Imran is the founder of the company. It is planning to introduce ABC
A. Al Azlan 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 64000 Labor 50000 40000 Inspection Factory lease 10000 Factory utilities 30000 20000 Advertising Training 18000 Demand Creation 20000 Maintenance of 40000 leaves The following cost drivers and their capacities have been identified: 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 in sales The cost of the facility-level activities is assigned using machine hours. You are required to create homogeneous cost pools. Identify the activities that belong to each pool and the activity driver that will be used for computing pool rates
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