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To do this: Your tutor will provide you with a case study that includes financial information about an engineering organization which either produces engineering products
To do this: Your tutor will provide you with a case study that includes financial information about an engineering organization which either produces engineering products or provides an engineering service. You should then: Investigate and report on the reasons why engineering organizations want to analyses and control costs, including how decision making can be influenced. Use the case study to research the costs associated with either producing a product or providing an engineering service. You should investigate how costs are allocated to individual activities, including direct costs, indirect costs, variable costs, semivariable costs, fixed costs and generaladministration costs. You should then use the case study to complete and record an iterative activitybased costing exercise to generate an activitybased cost model for an engineering product or service. This costing exercise should include five stages: identifying activities. assigning resource costs to activities. identifying outputs. assigning activity costs to outputs. assigning activity cost pools. Finally, you should reflect on the results of your activitybased costing exercise, by: a explaining how costs are categorized. b identifying those cost areas that have the greatest impact on the profitability of the product or service that you have investigated.Case study : Golf and Music Enthusiast Company GAME
GAME company developed two specialized products A and B For a recent period, the company sold units of A and units of B Traditional method has been used to allocate indirect costs. The net profit per unit for each type was determined as the following:
Net profit total revenue total expenses
Net profit per unit total revenue per unit direct material cost per unit direct labor cost per unit overhead cost per unit
Net profit $ unit
Net profit $ unit
The company is thinking of expanding production of type B because it makes higher profit. And stop production of A as a result of its lower profit.
Before taking this decision, the company needs you to build an Activity Based Costing model to make sure that they are taking the true decision. The company has indirect cost pools:
Machines setup activity with $ total cost
Purchase orders activity with $ total cost
Quality control activity with $ total cost
Machines maintenance activity with $ total cost.
The company produce two products A B with the following data:
tableDroductABNumber of units,Total revenue per unit,$$
Please Calculate Profit
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