Unit Cost Under Abc Costing Method
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Unit Cost Under ABC Costing Method Bright and Shiny Dog Collars Diagram 1 Total Overhead Cost Chart
Activity Cost Pools
Cost Drivers
Purchasing Receiving Cutting Assembling Finishing Packing and shipping Total
Orders Yards Yards Pieces Pieces Cartons
Total Expected Use of Cost Drivers
Estimated Overhead 3,000 500 1,800 2,400 1,500 800 $10,000
10 20 500 500 500 50
Expected Use of Cost Drivers per Product Simple Jeweled 3 7 6 7 225 275 225 275 225 275 15 35
Diagram 2 Calculation of Cost per Unit for Each Cost Driver
Activity Cost Pools Purchasing Receiving Cutting Assembling Finishing Packing and shipping Total
Estimated Overhead 3,000 500 1,800 2,400 1,500
/ / / / /
Total Expected Use of Cost Drivers 10 20 500 500 500
800 $10,000
50
Cost Per Unit = = = = =
300.00 25.00 3.60 4.80 3.00 16.00
Diagram 3 Calculation of the Simple Collar Overhead Cost Activity Cost Pools Purchasing Receiving Cutting Assembling Finishing Packing and shipping
Cost per Unit 300.00 25.00 3.60 4.80 3.00 16.00
Simple X X X X X X
3 6 225 225 225 15 Divided by
MJC Revised 6/2013
= = = = = =
Total Cost Per Units 900.00 150.00 810.00 1,080.00 675.00 240.00 3,855.00 225 $17.13
Total Overhead Units Produced Cost per Unit
Page 1
Unit Cost Under ABC Costing Method Diagram 4 Calculation of the Jeweled Collar Overhead Cost
Activity Cost Pools
Cost per Unit
Purchasing Receiving Cutting Assembling Finishing Packing and shipping
300.00 25.00 3.60 4.80 3.00 16.00
Total Cost Per Units
Jeweled X X X X X X
7 7 275 275 275 35
= = = = = =
Divided by
3,600.00 6,875.00 990.00 1,320.00 105.00 560.00 $13,450.00 275 $48.91
Total Overhead Units Produced Cost per Unit
Diagram 5 Unit Product Cost Under ABC Costing Method Simple
MJC Revised 6/2013
Jeweled
Direct Material Direct Labor
0.50
10.00
3.50
7.00
Overhead
17.13
48.91
Total Unit Cost
$21.13
$65.91
Page 2
Unit Cost Under ABC Costing Method Systematic Instructions 1. Create diagram 1 with these headings:
Activity Cost Pools
Cost Drivers
Estimated Overhead
Total Expected Use of Cost Drivers
Expected Use of Cost Drivers per Product Simple Jeweled
The information for this chart will be gathered from the heads of each department. It will include a total estimate of overhead and the expected total use of cost drivers plus a break down per product line. 2. Create diagram 2 with these headings:
Activity Cost Pools
Estimated Overhead
Total Expected Use of Cost Drivers
Cost Per Unit
Copy the information for column 1, 3, and 4 from diagram 1. Now divided the total estimated overhead for each cost pool by the total expected use of cost drivers for that pool to get the cost per unit of overhead. 3. Create Diagram 3 with these headings:
Activity Cost Pools
Cost per Unit
Simple
Total Cost Per Units
Copy the information from column 5 of diagram one under simple. Copy the information from column 4 diagrams 2 into the column labeled Cost per Unit. Now multiply the cost per unit times the simple to get the total cost per units for each activity cost pool. Add the Total cost per unit’s column down to get the total overhead for the simple product line. The very last step is to divide the total overhead cost per this product line by the number of units produced to get a per unit overhead cost.
MJC Revised 6/2013
Page 3
Unit Cost Under ABC Costing Method
4. Create Diagram 4 with these headings:
Activity Cost Pools
Cost per Unit
Jeweled
Total Cost Per Units
Copy the information from column 6 of diagrams one under jeweled. Copy the information from column 4 diagrams 2 into the column labeled Cost per Unit. Now multiply the cost per unit times the jeweled to get the total cost per units for each activity cost pool. Add the Total cost per unit’s column down to get the total overhead for the jeweled product line. The very last step is to divide the total overhead cost per this product line by the number of units produced to get a per unit overhead cost. 5. Create Diagram 5 with these headings and side column titles:
Simple
Jeweled
Direct Material Direct Labor Overhead Total Unit Cost
The information for per unit cost of direct materials and direct labor are Simple (Direct Material .50¢); Jeweled (Direct Material $10.00); Simple (Direct Labor $3.50); Jeweled (Direct Labor $7.00). The direct material and direct labor cost will be given to you. The Overhead cost per unit will be taken from diagrams 3 and 4. Total the columns for simple and jeweled down to achieve total product cost per unit for each product line.
MJC Revised 6/2013
Page 4
Activity Cost Pools
Cost Drivers
Purchasing Receiving Cutting Assembling Finishing Packing and shipping Total
Orders Yards Yards Pieces Pieces Cartons
Total Expected Use of Cost Drivers
Estimated Overhead 3,000 500 1,800 2,400 1,500 800 $10,000
10 20 500 500 500 50
Expected Use of Cost Drivers per Product Simple Jeweled 3 7 6 7 225 275 225 275 225 275 15 35
Diagram 2 Calculation of Cost per Unit for Each Cost Driver
Activity Cost Pools Purchasing Receiving Cutting Assembling Finishing Packing and shipping Total
Estimated Overhead 3,000 500 1,800 2,400 1,500
/ / / / /
Total Expected Use of Cost Drivers 10 20 500 500 500
800 $10,000
50
Cost Per Unit = = = = =
300.00 25.00 3.60 4.80 3.00 16.00
Diagram 3 Calculation of the Simple Collar Overhead Cost Activity Cost Pools Purchasing Receiving Cutting Assembling Finishing Packing and shipping
Cost per Unit 300.00 25.00 3.60 4.80 3.00 16.00
Simple X X X X X X
3 6 225 225 225 15 Divided by
MJC Revised 6/2013
= = = = = =
Total Cost Per Units 900.00 150.00 810.00 1,080.00 675.00 240.00 3,855.00 225 $17.13
Total Overhead Units Produced Cost per Unit
Page 1
Unit Cost Under ABC Costing Method Diagram 4 Calculation of the Jeweled Collar Overhead Cost
Activity Cost Pools
Cost per Unit
Purchasing Receiving Cutting Assembling Finishing Packing and shipping
300.00 25.00 3.60 4.80 3.00 16.00
Total Cost Per Units
Jeweled X X X X X X
7 7 275 275 275 35
= = = = = =
Divided by
3,600.00 6,875.00 990.00 1,320.00 105.00 560.00 $13,450.00 275 $48.91
Total Overhead Units Produced Cost per Unit
Diagram 5 Unit Product Cost Under ABC Costing Method Simple
MJC Revised 6/2013
Jeweled
Direct Material Direct Labor
0.50
10.00
3.50
7.00
Overhead
17.13
48.91
Total Unit Cost
$21.13
$65.91
Page 2
Unit Cost Under ABC Costing Method Systematic Instructions 1. Create diagram 1 with these headings:
Activity Cost Pools
Cost Drivers
Estimated Overhead
Total Expected Use of Cost Drivers
Expected Use of Cost Drivers per Product Simple Jeweled
The information for this chart will be gathered from the heads of each department. It will include a total estimate of overhead and the expected total use of cost drivers plus a break down per product line. 2. Create diagram 2 with these headings:
Activity Cost Pools
Estimated Overhead
Total Expected Use of Cost Drivers
Cost Per Unit
Copy the information for column 1, 3, and 4 from diagram 1. Now divided the total estimated overhead for each cost pool by the total expected use of cost drivers for that pool to get the cost per unit of overhead. 3. Create Diagram 3 with these headings:
Activity Cost Pools
Cost per Unit
Simple
Total Cost Per Units
Copy the information from column 5 of diagram one under simple. Copy the information from column 4 diagrams 2 into the column labeled Cost per Unit. Now multiply the cost per unit times the simple to get the total cost per units for each activity cost pool. Add the Total cost per unit’s column down to get the total overhead for the simple product line. The very last step is to divide the total overhead cost per this product line by the number of units produced to get a per unit overhead cost.
MJC Revised 6/2013
Page 3
Unit Cost Under ABC Costing Method
4. Create Diagram 4 with these headings:
Activity Cost Pools
Cost per Unit
Jeweled
Total Cost Per Units
Copy the information from column 6 of diagrams one under jeweled. Copy the information from column 4 diagrams 2 into the column labeled Cost per Unit. Now multiply the cost per unit times the jeweled to get the total cost per units for each activity cost pool. Add the Total cost per unit’s column down to get the total overhead for the jeweled product line. The very last step is to divide the total overhead cost per this product line by the number of units produced to get a per unit overhead cost. 5. Create Diagram 5 with these headings and side column titles:
Simple
Jeweled
Direct Material Direct Labor Overhead Total Unit Cost
The information for per unit cost of direct materials and direct labor are Simple (Direct Material .50¢); Jeweled (Direct Material $10.00); Simple (Direct Labor $3.50); Jeweled (Direct Labor $7.00). The direct material and direct labor cost will be given to you. The Overhead cost per unit will be taken from diagrams 3 and 4. Total the columns for simple and jeweled down to achieve total product cost per unit for each product line.
MJC Revised 6/2013
Page 4
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