- Grey - hogar pertecepe carr + Paw materwale edo: elvan, tet 1 Driver of the Budgeted Puvceleo Activity ee ak Lavi, sudgeteacest [Activity Costs saivtyievet Rode Purchasing 20,000 “ Purchased orders 909 ~ 882008 Material handling 95,000 Setups 1846 Sto 46 alending 122,000 Blender hours roo 12, Freezing 175,000 Freezer hours 1,936 90/29 Packaging 110,000 Packaging machine hours 1100 too Quality control 18,000 Batches 286 2.94 Total 500,000 Polynesian Fantasy varie © salt level_ activity - Direct material 2.00 gation 780 /eafon heehee Ag, Direct labor ies wi 0 ne a Se ere —— @ ar level ackwi Batch sie 100. gallons 2.500 gallons + votes seus perch a pertucs NRE Purchase order size 50 gallons 2,000 gallons Bender time 06/100 gallons 03 fs0dgalons 80k A Adal Flan Freezertime 40/200 gallons 10 /r00gations Poe dart ante Packaging machine time 03/200 gallons 0.2 /100 gallons sie = @ Podu ct Sustaining, “Level 1 Compute the full production cost (per gallon) of the Polynesian Fantasy and Vanilla's products. # Leagaging- ent ‘Old Costing Method or batch Polynesian Fantasy Vanilla “ee Direct material “4,000 180,000 vyroct | ghey” Direct labor 2,400 120,000 et x + Qverhead cost 4,800 240,000 Ma Totaleost 73,200 540,000, “fers ~\ Gaiteost per galion Sem W200 $a = 540,000 hy” 2000 Pereereet 100, 000 b-Activty-bosed Method v Polynesian Fantasy Vanilla a ype iat conte Direct material 4,000.9 180,0000 aa Wat ect labor 24000 120,000. \ Total Direct Cost 6,400.0 *300,000.0 a4 KERG activity costs aN alte uur Purchasing Boe Jens 40 ~—«3, 520.4 | Clco.cc/ow)= to 8,800.9 equcchoor eral handine ( 000/1003¥3 = 60-3087 | (wou /as00'xs-"20 6755 ¥ ENSONOOF blending (ooe/eco) Koje>'2 1,464.0 [(6.000/Ip0) 10.3 =300 44640 36,COD ory ths Freezing (Coveficoyy > 30 1,807.9 a 000/80) x > 090 3:625:7 90,200 7 Packaging Caoc/eo) xo = 6, Ko co0 fio) x02 260 g000 20, COO rear YOgo aultyconsel (B00 / 180 no 15587 Leo 000 sos) 40 $03 9, 517-6 “otal Activity Costs T7387 70806. e404Roa —memea)) tela! 464.486, 4 Tad epg ___—— 4 ot C 464-8644 ) {100,090 2 What are the effects? ‘Their effect on individual product costs From the results of calculations above, show that the cost of praduction for the Polynesian Fantasy is much higher than the cost of Vanilla, Will should sell Polynesia Fantasy higher then the price of Vanilla, Their effect on total company profits ‘The efects on total company profits will depend on the number and value of sales of each product. When Will sing the ABC method, it wll be able to see the contribution of each product to the company's financial performance more accurately so that Will can consider to determine which product should be removed and hich products should be produced more What should Will do now? We believe thet Will should start using Activity Based Costing. determining the cost ofthe products end the selling price ofthe produets. Because the ABC method is not only more accurate to determining cost of products but also show cost of each activity in production operation, so that Will could improve the efficiency by eliminating the Inefficient costs. Prigucron Quanity 2-C0O ee Unie Coat a 4,64 Galliy Bree wo eagin 18-4 8 Ag