*Managerial Accounting* - Activity Based Costing

I have to come up with my own company selling t-shirt, and to implement the ABC system for my company, Lagoon Shirt Company.

The following relates to the Manufacturing Overhead Costs for Lagoon Shirt Company.

Lagoon sells two types of t-shirt, Seashell and Waves.

1) Determine an appropraite cost driver for each activity (note: since ABC system is used, the cost driver identified should not be an unit-level cost driver).

Activity	Cost Driver
Cutting	a
Sewing	b
Finishing	c
Material handling	d
Purchasing	e
Quality Assurance	f
Packaging	g
T shirt Design	h
Admin	i
Retail outlet	j
personnel	k

a -

b -

..

k -

2) Are all the activities identified above approprate? Eg: Store is not part of production, but instead, is part of selling costs. ABC focuses on assigning FACTORY OVERHEAD. In this case, should't "Store" NOT be included as an activity since it is not part of production (As such, do not allocate FOH costs to this department). Same goes for Personel and Admin department, should they be excluded from the list?

NOTE: items on the ABC table has been added by me. As such, I do not know if they are correct. eg, should "store", "personel" and "admin" be part of ABC? Since they are not part of production