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ACC 421 - ABC - Practical Illustration The following details have been recorded for 4 batches made in a period: Batch A B D Output

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ACC 421 - ABC - Practical Illustration The following details have been recorded for 4 batches made in a period: Batch A B D Output in units 250 60 200 120 Cost per batch f Direct Material 1650 750 2100 900 Direct Labour 9200 1520 6880 2400 Hours Hours Hours Hours Labour hours per batch 1150 190 860 300 The total production overhead for the period has been analysed as follows: Machine related costs 14600 Materials handling & dispatch 6800 Stores 8250 5850 Inspection Quality control Set-up Engineering support 6200 8300 Total 50000 Cost drivers have been identified for the cost pools as follows: Cost pool Cost driver Machine costs Machine hours Materials handling Materials movements Stores Requisitions raised Inspection No. of inspections Set-up No. of set-ups Engineering support Engineering hours The following cost driver volumes were recorded for the batches: Batch A B C D Total 520 255 610 325 1710 Machine hours per batch Material mo movements Requisitions 180 70 205 40 495 40 21 43 26 130 18 8 13 8 47 Inspections Set-ups Engineering hours 12 7 16 8 43 65 38 52 35 190 Required: a. The batch and unit costs using traditional costing based on a labour hour overhead absorption rate. b. The batch and unit costs using ABC c. Compare the costs in (a) and (b)

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