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:

The company manufactures 10 kits per batch. Each kit requires 20 parts and two hours in molding, and weighs 30 pounds.
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. 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-addedactivities.

  • CreatedJanuary 26, 2015
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