7.42 L04 ABC Costs, Uncertainties, ABM, Non-Value-Added Activities The Pond Kit Company manufactures kits for fish...

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7.42 L04 ABC Costs, Uncertainties, ABM, Non-Value-Added Activities The Pond Kit Company manufactures kits for fish ponds. The managers recently set up an ABC system to identify and reduce non-value-added activities. The ABC system includes the following cost pools, cost drivers, and estimated costs for manufacturing activities: Activity Cost Driver Cost Allocation Rate Material handling Number of parts $1.00 per part Forming Moulding hours 40.00 per hour Moulding setup Number of batches 50.00 per batch Packing and Weight 1.30 per kg shipping Inspection Finished kits 10.00 per kit Direct labour Finished kits 20.00 per kit Finished kits 100.00 per kit Direct materials The company manufactures 10 kits per batch. Each kit requires 20 parts and two hours in moulding, and each weighs 30 kg. REQUIRED A. Calculate the total ABC manufacturing cost per batch. B. Calculate the total ABC cost per finished kit. C. Suppose that Pond Kit's managers also want to allocate marketing costs and customer service to each product. Total marketing costs for the period were $15,000, and customer service costs were $25,000. The number of batches produced was 1,000. Calculate the total ABC cost per unit and cost per kit, including the costs of marketing and customer services. D. Are the activities listed likely to be the only possible set of activities for Pond Kit Company? Why or why not? E. Describe how the managers and accountants of Pond Kit Company might use this new ABC system to identify non-value-added activities. 7.42 L04 ABC Costs, Uncertainties, ABM, Non-Value-Added Activities The Pond Kit Company manufactures kits for fish ponds. The managers recently set up an ABC system to identify and reduce non-value-added activities. The ABC system includes the following cost pools, cost drivers, and estimated costs for manufacturing activities: Activity Cost Driver Cost Allocation Rate Material handling Number of parts $1.00 per part Forming Moulding hours 40.00 per hour Moulding setup Number of batches 50.00 per batch Packing and Weight 1.30 per kg shipping Inspection Finished kits 10.00 per kit Direct labour Finished kits 20.00 per kit Finished kits 100.00 per kit Direct materials The company manufactures 10 kits per batch. Each kit requires 20 parts and two hours in moulding, and each weighs 30 kg. REQUIRED A. Calculate the total ABC manufacturing cost per batch. B. Calculate the total ABC cost per finished kit. C. Suppose that Pond Kit's managers also want to allocate marketing costs and customer service to each product. Total marketing costs for the period were $15,000, and customer service costs were $25,000. The number of batches produced was 1,000. Calculate the total ABC cost per unit and cost per kit, including the costs of marketing and customer services. D. Are the activities listed likely to be the only possible set of activities for Pond Kit Company? Why or why not? E. Describe how the managers and accountants of Pond Kit Company might use this new ABC system to identify non-value-added activities.