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The Robt Toy Company makes a variety of dolls at its operation in London. Its manufacturing process is highly automated. A recently installedABC system has
The Robt Toy Company makes a variety of dolls at its operation in London. Its manufacturing process is highly automated. A recently installedABC system has four activity centers:Activity CenterMaterials receiving and handlingProduction setupCutting, sewing, and assemblyPacking and shippingCost DriverKilograms of materialsNumber of setupsNumber of unitsNumber of ordersCost per Driver Unit per kg per setup per unitE per orderTwo dolls are called "Ann" and "Andy." They require and kg of materials, respectively, at a materials cost of for Ann and for Andy. One computercontrolled assembly line makes all dolls. When a production run of a different doll is started, a setup procedure is required to reprogram the computers and make other changes in the process. Normally, Ann dolls are produced per setup, but for Andy dolls, only are produced per setup. Products are packed and shipped separately so a request from a customer for, say, three different products is considered three different orders.Suppose the gift shop at the Camberley Toy Museum just placed an order for Ann dolls and Andy dolls.i Compute the cost of the products shipped to the Camberley Toy Museum gift shop.ii Suppose the products made for the Camberley Toy Museum gift shop required"their name" to be printed on each doll.Because of the automated process, printing the letters takes no extra time or materials, but it requires a special production setup for each product. Compute the cost of the products shipped to the Camberley Toy Muesuem gift shop. Explain how the activitybasedcosting system helps Robt Toy Company to measure costs of individual products or orders better than a traditional system that allocates all nonmaterials costs based ondirect labour.
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