Question
sporting goods store pride itself son its services to customers sales personal who are paid a commission based on sales dollars spend a lot of
sporting goods store pride itself son its services to customers sales personal who are paid a commission based on sales dollars spend a lot of time with customeres helpingthempick the best product the ABC teamdeveloped the following data for the typical month for 600 products
cost drive base activity cost activity voluom
unit level
1-1 sales goods on commision $ sales $23000 $ 230000
Batchlevel
2-1 process purchase nu of purchase order 6000 200
product level
3-1 product advirtising nu of promtion 2000 200
3-2 product inventory nu of product 3000 600
customer level
4-1 acceptance customer return nu of returns 12000 800
facility level
5-1 suppervise sales personal cost of sales personal 3910 $23000 for act 1-1 suppervision cost =17%of activity1-1
5-2 use building Sq Ft of shelf space used 32000 8000
compute total ost and unit cost of 20 tennis rackets and 10 fishing rods for june
1-1 sales goods on commision $ 2000 in sales T reckets $ 1000 in sales F rods
2-1process purchase 2 purchase order 3
3-1 product advirtising 2 promition 2 promotion
3-2 product inventory 1 product 1
4-1 acceptance customer return 6 return 2
5-1 suppervise sales personal see computation of activity 1-1 see computation of activity 1-1
5-2 use building 80 sq ft 60 sq ft
compute the cost drive for each cost driver base
use ABC to compute cost of each product compute both total cost and unit cost for each product the company sold 20 tennis rackets and 10 fishing rods
assume the company traditional system costing assigneed the batch level product, customer level, and facility level cost at rate of $8.70 per unit sold using traditional approch to compute the cost of eah product be sure to add unit level of the $8.70 per unit sold compute both total cost and unit cost for each product
afer computing ABC determined whether unit cost of the two product differ if they are what the cause difference
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