Learn About Activity Based Costing | Subjects
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Learn About Activity Based Costing

1 year ago

Table of Contents

 

•Concept of Activity Based Costing

•Case Study of ABC-

A company has two major businesses that it operates. One business manufactures and sells unicycles for commercial use in circuses, etc. (total sales of $150M), and the other sells bicycles to the public (total sales of $20M). The unicycle business occupies 75,000 square feet of the manufacturing warehouse and the bicycle business occupies the remaining 25,000 square feet. Cost were split 50-50 between the 2 businesses for advertising (total advertising expense of $5M) and warehouse expense (total warehouse expense of $3M) in the past (traditional method). 

What was the cost of advertising and warehouse expense allocated to each of the business based on the traditional method? 

What recommendation would you make in allocating these expenses to each of the business and how much would be allocated to each business?

•Assignment of ABC for UNICEF-  

Retrieve any report in the organization that allocates common costs to a division, product, or service.  Recast that report with unallocated costs and comment on the usefulness of that revised report. 

•Problems

 

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