ABC COSTING.

1. Compute the overhead costs to be assigned to each branch

2. Compute the profitability of each branch office using ABC

3. Discuss the ideas of improving the business with the new ABC information.

( $ IN THOUSANDS)

COLUMBUS CINCINNATI DAYTON TOTAL

SALES $ 1,500 1,419 1,067 3,986

LESS: DIRECT LABOR 382 317 317 1,016

DIRECT MATERIALS 281 421 185 887

OVERHEAD 710 589 589 1,888

NET INCOME 127 92 -24 195

DIRECT OVERHEAD $ 180 270 177 627

ACTIVITY POOLS AND THEIR CORRESPONDING COST DRIVERS WERE DETERMINED FROM ACCOUNTING RECORDS AS FOLLOWS:

GENERAL ADMINISTRATION $ 409,000

PROJECT COSTING 48,000

ACCOUNTS PAYABLE /RECEIVING 139,000

ACCOUNTS RECEIVABLE 47,000

PAYROLL / MAIL SORT AND DELIVERY 30,000

PERSONNEL RECRUITING 38,000

EMPLOYEE INSURANCE PROCESSING 14,000

PROPOSALS 139,000

SALES MEETINGS /SALES AIDS 202,000

SHIPPING 24,000

ORDERING 48,000

DUPLICATING COSTS 46,000

BLUEPRINTING 77,000

TOTAL $ 1,261,000

VOLUME OF COST DRIVERS BY LOCATION

COST DRIVERS COLUMBUS CINNCINNATI DAYTON

DIRECT LABOR COST $ 382,413 317,086 317,188

TIMESHEET ENTRIES 6,000 3,800 3,500

VENDOR INVOICES 1,020 850 400

CLIENT INVOICES 588 444 96

EMPLOYEES 23 26 18

NEW HIRES 8 4 7

INSURANCE CLAIMS FILED 230 260 180

PROPOSALS 200 250 60

CONTRACTED SALES 1,824,439 1,399,617 571,208

PROJECTS SHIPPED 99 124 30

PURCHASE ORDERS 135 110 80

COPIES DUPLICATED 162,500 146,250 65,000

BLUE PRINTS 39,000 31,200 16,000