Question
d) Management considers that the cost for Ingredients Delivery and Despatch to Customers are not fixed but also do not vary with sales quantity. The
d) Management considers that the cost for "Ingredients Delivery" and "Despatch to Customers" are not fixed but also do not vary with sales quantity. The following information relates to the budget for these activities:
Ingredients delivery of 5.1 kilos per product:
The standard quantity per delivery is 1000 kg. The budgeted cost is 76,500.
Despatch to customers:
The standard despatch quantity is 200 packs. The budgeted cost is 100,000.
Using an activity based approach for these two costs, calculate the activity based standards and show the variances which arise. Explain clearly why this information is more useful than the variances for these costs
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