Production run Handling production run Setup

10000 8000.00
4000 3200.00
8000

14000

TOTAL 14000 22000 11200.00

Activities
Handling production run
Activity Based Cos
Setup Blue Black
Maintaining records Sales 75000.00 60000.00
Production run Material costs 25000.00 20000.00
Direct labor 14000.00 11200.00
Overhead
1. Handling production 7333.00 7334.00
2. Setup 4258.00 1065.00
3. Maintaining records 1200.00 1200.00
4. Production run 7000.00 5600.00
Total operating income 16209.00 13601.00
Return on sales 0.22 0.23
 Maintaining records Allocated Indirect expenses Amount
2000 20000 Indirect labor 20000
800 8000 Fringe benefits 16000
2000 10000 Computer systems 10000
Machinery 8000
14000 Maintenance 4000
Energy 2000
4800 52000 Total 60000

Based Costing
Red Purple Total
13950.00 1650.00 150600.00
4680.00 550.00 50230.00
2520.00 280.00 28000.00

5573.00 1760.00 22000.00

4855.00 1022.00 11200.00
1200.00 1200.00 4800.00
1260.00 140.00 14000.00
-6138.00 -3302.00 20370.00
-0.44 -2.00 0.14
 Base Ratio Blue Black Red Purple
Production run 25 25 19 6 7333 7334 5573 1760
Total setup Time 100 25 114 24 4258 1065 4855 1022
Parts Administration 1 1 1 1 1200 1200 1200 1200
Machine hours 50 40 9 1 7000 5600 1260 140
Total
22000
11200
4800
14000
52000
 Blue Black Red Purple Total

Sales 75000 60000 13950 1650 150600

Material costs 25000 20000 4680 550 50230
Direct labor 10000 8000 1800 200 20000
Overhead 30000 24000 5400 600 60000 300%
Total operating income 10000 8000 2070 300 20370
Return on sales 13.3% 13.3% 14.8% 18.2% 13.5%

Blue Black Red Purple Total

Production sales volume 50000 40000 9000 1000 100000
Unit selling price 1.5 1.5 1.55 1.65
Material unit cost 0.5 0.5 0.52 0.55
Direct labor hrs./unit 0.02 0.02 0.02 0.02 2000
Machine hours/unit 0.1 0.1 0.1 0.1 10000
Production runs 50 50 38 12 150
Setup time/ run 4 1 6 4
Total setup time (hours) 200 50 228 48 526
Parts administration 1 1 1 1 4