OPERATING RESULTS (MARCH 2000)

Sales ₹ 2,152,500.00

Direct labor expenses ₹ 271,250.00

Direct material expenses ₹ 458,000.00

Manufacturing overhead
machine related expenses ₹ 336,000.00

setup labour ₹ 40,000.00

Receiving and production
control ₹ 180,000.00
Engneering ₹ 100,000.00

Packaging and shipping ₹ 150,000.00

Total manufacturig overhead ₹ 806,000.00

Gross margin ₹ 617,250.00

GS&A expenses ₹ 559,650.00

Operating income ₹ 57,600.00

product data valves pumps

Materials per unit

no. of components 4 5
total material cost ₹ 16.00 ₹ 20.00
direct labour per unit 0.4 0.5

diret labour cost @25 per hour ₹ 10.00 ₹ 12.50

machine hours per unit 0.5 0.5

ACTIVITY BASED COSTING ON ACTUAL CAPACITY USE

COST UNITS OF
ACTIVITY DRIVER COST DRIVER

allocation of overheads to prod

activity valves
units of activity cost of activity
3,750 #DIV/0!
10 #DIV/0!
10 #DIV/0!
250 #DIV/0!
10 #DIV/0!
7,500 #DIV/0!
#DIV/0!
PRODUCT PROFITABILITY STATE
DIRECT MATERIAL ₹ 16.00
DIRECT LABOR ₹ 10.00
OH ALLOCATED #DIV/0!
TOTAL COSTS #DIV/0!
ACTUAL SALE PRICE ₹ 86.00
GROSS PROFIT #DIV/0!
GROSS PROFIT MARGIN #DIV/0!
H 2000) PRODUCT PROFITABILITY ANALYSIS

VALVES PUMPS
100.00% Direct labur cost ₹ 10.00 ₹ 12.50
Direct material
cost ₹ 16.00 ₹ 20.00

Manufacturing
overhead at 300% ₹ 30.00 ₹ 37.50

Standard unit costs ₹ 56.00 ₹ 70.00

Target selling
price ₹ 86.15 ₹ 107.69
Planned gross
margin 35.00% 35.00%

Actual selling
price ₹ 86.00 ₹ 87.00
Actual gross
margin 34.88% 19.54%
28.68%

DIRECT
LABOUR COST
PER HOUR ₹ 25.00
2.68%
MONTHLY PRODUCTION STATISTICE

flow controllers VALVES PUMPS

Production in units 7,500 12,500

10 machine hours 3,750 6,250
₹ 22.00 production runs 10 50
 number of
0.4 shipments 10 70

hours of
₹ 10.00 engineering works 250 375
0.3

TUAL CAPACITY USED

COST PER
UNIT OF
COST OF COST
ACTIVITY DRIVER
#DIV/0!

#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!

on of overheads to products
pumps flow controllers
units of activity cost of activity units of activity cost of activity
6,250 #DIV/0! 1,200 #DIV/0!
50 #DIV/0! 100 #DIV/0!
50 #DIV/0! 100 #DIV/0!
375 #DIV/0! 625 #DIV/0!
70 #DIV/0! 220 #DIV/0!
12,500 #DIV/0! 4,000 #DIV/0!
#DIV/0! #DIV/0!
ROFITABILITY STATEMENT
₹ 20.00 ₹ 22.00
₹ 12.50 ₹ 10.00
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
 ₹ 87.00 ₹ 105.00
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
TY ANALYSIS

FLOW
CONTROLLERS
₹ 10.00

₹ 22.00

₹ 30.00

₹ 62.00

₹ 95.38

35.00%

₹ 105.00

40.95%

TION STATISTICE

FLOW
CONTROLLERS TOTAL

4,000 24,000
1,200 11,200
100 160
220 300

625 1250
 OPERATING RESULTS (MARCH 2000)

Sales ₹ 2,152,500.00

Direct labor expenses ₹ 271,250.00

Direct material expenses ₹ 458,000.00

Manufacturing overhead
machine related expenses ₹ 336,000.00

setup labour ₹ 40,000.00

Receiving and production
control ₹ 180,000.00
Engneering ₹ 100,000.00

Packaging and shipping ₹ 150,000.00

Total manufacturig overhead ₹ 806,000.00

Gross margin ₹ 617,250.00

GS&A expenses ₹ 559,650.00

Operating income ₹ 57,600.00

product data valves pumps

Materials per unit

no. of components 4 5
total material cost ₹ 16.00 ₹ 20.00
direct labour per unit 0.4 0.5

diret labour cost @25 per hour ₹ 10.00 ₹ 12.50

machine hours per unit 0.5 0.5

ACTIVITY BASED COSTING ON ACTUAL CAPACITY USE

COST UNITS OF
ACTIVITY DRIVER COST DRIVER
11,200

160

160
1,250
300

allocation of overheads to prod

activity valves
units of activity cost of activity
3,750 ₹ 0.00
10 ₹ 0.00
10 ₹ 0.00
250 ₹ 0.00
10 ₹ 0.00
7,500 ₹ 0.00
₹ 0.00
PRODUCT PROFITABILITY STATE
DIRECT MATERIAL ₹ 16.00
DIRECT LABOR ₹ 10.00
OH ALLOCATED ₹ 0.00
TOTAL COSTS
ACTUAL SALE PRICE
GROSS PROFIT -₹ 26.00
GROSS PROFIT MARGIN #DIV/0!
H 2000) PRODUCT PROFITABILITY ANALYSIS

VALVES PUMPS
100.00% Direct labur cost ₹ 10.00 ₹ 12.50
Direct material
cost ₹ 16.00 ₹ 20.00

Manufacturing
overhead at 300% ₹ 30.00 ₹ 37.50

Standard unit costs ₹ 56.00 ₹ 70.00

Target selling
price ₹ 86.15 ₹ 107.69
Planned gross
margin 35.00% 35.00%

Actual selling
price ₹ 86.00 ₹ 87.00
Actual gross
margin 34.88% 19.54%
28.68%

DIRECT
LABOUR COST
PER HOUR ₹ 25.00
2.68%
MONTHLY PRODUCTION STATISTICE

flow controllers VALVES PUMPS

Production in units 7,500 12,500

10 machine hours 3,750 6,250
₹ 22.00 production runs 10 50
 number of
0.4 shipments 10 70

hours of
₹ 10.00 engineering works 250 375
0.3

TUAL CAPACITY USED

COST PER
UNIT OF
COST OF COST
ACTIVITY DRIVER
₹ 0.00

₹ 0.00

₹ 0.00
₹ 0.00
₹ 0.00

on of overheads to products
pumps flow controllers
units of activity cost of activity units of activity cost of activity
6,250 ₹ 0.00 1,200 ₹ 0.00
50 ₹ 0.00 100 ₹ 0.00
50 ₹ 0.00 100 ₹ 0.00
375 ₹ 0.00 625 ₹ 0.00
70 ₹ 0.00 220 ₹ 0.00
12,500 ₹ 0.00 4,000 ₹ 0.00
₹ 0.00 ₹ 0.00
ROFITABILITY STATEMENT
₹ 20.00 ₹ 22.00
₹ 12.50 ₹ 10.00
₹ 0.00 ₹ 0.00
-₹ 32.50 -₹ 32.00
#DIV/0! #DIV/0!

813750
TY ANALYSIS

FLOW
CONTROLLERS
₹ 10.00

₹ 22.00

₹ 30.00

₹ 62.00

₹ 95.38

35.00%

₹ 105.00

40.95%

TION STATISTICE

FLOW
CONTROLLERS TOTAL

4,000 24,000
1,200 11,200
100 160
220 300

625 1250
 expense category expense
Indirect labour ₹ 20,000.00
Fringe benefits ₹ 16,000.00 Sales
Computer systems ₹ 10,000.00 Material costs
Mahcinery ₹ 8,000.00 Dirct labour
Maintenance ₹ 4,000.00 Overhead at 300%
Energy ₹ 2,000.00 Total operating incom
TOTAL ₹ 60,000.00 Return on sales

DIRECT

Production sales
volume
Unit selling price
Materials unit cost
Direct labour hours/
unit
Mahcine hours / unit
Production runs
Setup time per run
Total set up time in
hours
Parts administration

mapping cost items to activ

cost items/ actitivty

Indirect labour
fringe benefits
computer systems
Machinery
Maintenance
Energy
Total costs of the activity ₹ 0.00
no. of production
Cost driver runs
Units of cost driver 150
Cost per unit of cost driver ₹ 0.00

ALLOCATION OF COSTS O
BLUE
 COST PER
UNIT OF UNIT OF
ACTIVITY UNIT ACTIVITY ACTIVITY
NO. OF RUNS ₹ 0.00 50
SET UP TIME ₹ 0.00 200
NO. OF MODELS ₹ 0.00 1
MACHINE TIME ₹ 0.00 5,000.00
TOTAL COSTS
PRODUCTION VOLUME
OVER HEAD COST
ALLOCATED PER UNIT

PROFITABILITY S
BLUE

Sales price ₹ 1.50

Material cost ₹ 0.50

Direct labour ₹ 0.20
fringe on direct
labour ₹ 0.08
OH cost
allocated ₹ 0.00

Profit per unit

Return on sales 0.00%
 traditional income statement
BLUE BLACK RED PURPLE TOTAL
₹ 75,000.00 ₹ 60,000.00 ₹ 13,950.00 ₹ 1,650.00 ₹ 150,600.00
₹ 25,000.00 ₹ 20,000.00 ₹ 4,680.00 ₹ 550.00 ₹ 50,230.00
₹ 10,000.00 ₹ 8,000.00 ₹ 1,800.00 ₹ 200.00 ₹ 20,000.00
₹ 30,000.00 ₹ 24,000.00 ₹ 5,400.00 ₹ 600.00 ₹ 60,000.00
₹ 10,000.00 ₹ 8,000.00 ₹ 2,070.00 ₹ 300.00 ₹ 20,370.00
13.33% 13.33% 14.84% 18.18% 13.53%

DIRECT COSTS AND ACTIVITY COST DRIVERS

BLUE BLACK RED PURPLE TOTAL

50,000 40,000 9,000 1,000 100,000

₹ 1.50 ₹ 1.50 ₹ 1.55 ₹ 1.65
₹ 0.50 ₹ 0.50 ₹ 0.52 ₹ 0.55

0.02 0.02 0.02 0.02 2,000.00

0.10 0.10 0.10 0.10 10,000
50.00 50.00 38.00 12.00 150
4 1 6 4

200 50 228 48 526

1 1 1 1 4

g cost items to activities

total
expenses
₹ 0.00
₹ 0.00
₹ 0.00
₹ 0.00
₹ 0.00
₹ 0.00
₹ 0.00 ₹ 0.00 ₹ 0.00
machine time in
set up time no. of model hours
526 4 10,000
₹ 0.00 ₹ 0.00 ₹ 0.00

OCATION OF COSTS OF ACTIVITY TO PRODUCTS

BLUE BLACK RED PURPLE
 UNIT OF COST OF UNIT OF COST OF UNIT OF
COST OF ACTIVITY ACTIVITY ACTIVITY ACTIVITY ACTIVITY ACTIVITY
₹ 0.00 50 ₹ 0.00 38 ₹ 0.00 12
₹ 0.00 50 ₹ 0.00 228 ₹ 0.00 48
₹ 0.00 1 ₹ 0.00 1 ₹ 0.00 1
₹ 0.00 4,000.00 ₹ 0.00 900 ₹ 0.00 100
₹ 0.00 ₹ 0.00 ₹ 0.00
50,000 40,000 9,000

₹ 0.00 ₹ 0.00 ₹ 0.00

PROFITABILITY STAMENT PRODUCT WISE

BLACK RED PURPLE

₹ 1.50 ₹ 1.55 ₹ 1.65

₹ 0.50 ₹ 0.52 ₹ 0.55

₹ 0.20 ₹ 0.20 ₹ 0.20

₹ 0.08 ₹ 0.08 ₹ 0.08

₹ 0.00 ₹ 0.00 ₹ 0.00

0.00% 0.00% 0.00%

PURPLE
COST OF
ACTIVITY
₹ 0.00
₹ 0.00
₹ 0.00
₹ 0.00
₹ 0.00
1,000

₹ 0.00
 DEPT A DEPT B DEPT C
Estimated overhead ₹ 4,000,000.00 ₹ 3,000,000.00 ₹ 3,000,000.00
Estimated direct labor ₹ 1,200,000.00 ₹ 630,000.00 ₹ 1,250,000.00
Overhead rate ₹ 3.33 ₹ 4.76 ₹ 2.40

Direct labor costs

job 201 ₹ 9,500.00 ₹ 3,000.00 ₹ 4,500.00
job 202 ₹ 5,000.00 ₹ 6,500.00 ₹ 9,000.00
job 203 ₹ 2,000.00 ₹ 5,000.00 ₹ 2,000.00

overhead as per
dept. DIRECT LABOUR TOTAL
JOB 201 ₹ 56,752.38 ₹ 17,000.00 ₹ 73,752.38
JOB 202 ₹ 69,219.05 ₹ 20,500.00 ₹ 89,719.05
JOB 203 ₹ 35,276.19 ₹ 9,000.00 ₹ 44,276.19
 TOTAL
₹ 10,000,000.00
₹ 3,080,000.00
₹ 3.25

overheads total cost

₹ 17,000.00 ₹ 55,194.81 ₹ 72,194.81
₹ 20,500.00 ₹ 66,558.44 ₹ 87,058.44
₹ 9,000.00 ₹ 29,220.78 ₹ 38,220.78

OVER ALL OH
RATE
₹ 72,194.81
₹ 87,058.44
₹ 38,220.78
old method new method

material $500.00
labour $140.00
overheads $84.00

total $724.00
$500.00
$140.00
$155.08 22.15
155.08
$795.08
 ESTIMATION OF OVERHEAD RATES FOR ACTIVITIES
DRIVER DRIVER
OVERHEAD COSTS UNIT UNITS RATE
set up labor $925,760.00 SET UPS 3,310 $279.69
DIRECT
LABOR
equipment $1,476,000.00 COST $325,650 $4.53
rent $390,000.00 TESTS 295,500 $1.32
billing $235,000.00 TESTS 295,500 $0.80
clerical $160,000.00 TESTS 295,500 $0.54
other $200,000.00 TESTS 295,500 $0.68
TOTAL $3,386,760.00

cost of test t1

price $35.00
direct material $12.00
direct labour $1.50

overhead
set up labor $27.97
equipment $6.80
rent $1.32
billing $0.80
clerical $0.54
other $0.68 $38.11 $38.11

profit per test -$16.61

total turnover $65,78,500.00

reduction in turnover $61,250.00
% reduction in turnover 0.93%
RATES FOR ACTIVITIES

IF NUCLEAR IS DROPPED
3,135 ₹ 295.30

$323,025.00 ₹ 4.57
293,750 ₹ 1.33
293,750 ₹ 0.80
293,750 ₹ 0.54
293,750 ₹ 0.68

cost per test after dropping nuclear

incremental
profit
$35.00
$12.00
$1.50 $ 13.50 ₹ 37,625.00

$29.53
$6.85
$1.33
$0.80
$0.54
$0.68
total cost $53.23
profit per test -$18.23