traditional costing vs abc costing system

Part A Forecasted Direct Labour Hours

Hinkels : 400 ,000 x 0 .60 240 ,000 direct labour hours

Quirts : 100 ,000 x 0 .80 80 ,000 direct labour hours

2 . Hinkels

Direct Materials (400 ,000 x 5 2 ,000 ,000

Direct Labour (400 ,000 x 6 2 ,400 ,000

Variable Factory Overheads (400 ,000 x 0 .60 x 4 960 ,000

Fixed Factory Overheads (400 ,000 x 0 .60 x 4 .75 1 ,140 ,000

Quirts

Direct Materials (100 ,000 x 10 1 ,000 ,000

Direct Labour (100 ,000 x 8

800 ,000

Variable Factory Overheads (100 ,000 x 0 .80 x 4 320 ,000

Fixed Factory Overheads (100 ,000 x 0 .80 x 4 .75 380 ,000

3 . Hinkels

Selling Price 21

Variable Costs 5 6 2 .40 13 .40

Contribution 7 .60 Quirts

Selling Price 30

Variable Costs 10 8 3 .20 21 .20

Contribution 8 .80 Sales Level Hinkels : 232 ,927 x 7 .6 /16 .40 107 ,942 cases

Sales Level Quirts : 232 ,927 x 8 .8 /16 .4 124 ,985 cases

Part B

1 . Variable Factory Overheads per Cost Driver Fixed Factory Overheads per Direct Labour Hour a . Hinkels

Variable Factory Overheads

Purchases Related Overheads 2 .20 x 150 ,000 330 ,000

Material Move Related Overheads 4 .10 x 110 ,000 451 ,000

Machine Hours Related Overheads 2 .65 x 60 ,000 159 ,000

Direct Labour Hours Related Overheads 3 x 240 ,000 720 ,000

Total Variable...