Company XYZ has 6 standard products from stainless steel and brass. The company's most popular product is Product XX. The information below shows Product XX's data for next year's budget. Using this information, a) calculate the budgeted overhead costs using activity-based costing principles, b) calculate the budgeted overhead costs using absorption costing (absorb overhead using machine hours), and c) how can the company reduce the ABC for Product XX:

1. ___________________
2. ___________________
3. ___________________

Customer

AAA

BBB

Component Type

A999

B999

Contract Value ($)

$27,000

$100,000

Contract Quantity

1,000 unit

2,000 unit

Material cost/unit

$15

$20

Moulding time/batch

5 hours

7.5 hours

Batch size

100 units

50 units

Activity

Cost Driver

Cost Driver Volume/Yr

Cost Pool

Purchasing

Purchase orders

1,500

$75,000

Setting

Batches produced

2,800

$112,000

Materials handling

Materials movements

8,000

$96,000

Inspection

Batches produced

2,800

$70,000

Machining costs

Machine hours

50,000

$150,000

Purchase orders

25

Output

15,000 units

Production batch size

100 units

Materials movements per batch

6

Machine hours per unit

0.1