Assignment Questions

Determine the best base for allocating plant$-$administration costs.

Calculate the ABC costs for each product on a per$-$box basis.

What do these results tell you about activity$-$based costing versus costing based on standard volume or direct materials plus direct labor?

What changes, if any, should management make to Zauner's pricing strategy?

$-8-$

UVA$-$C$-2181$

Exhibit $4$

ZAUNER ORNAMENTS

Historical Five$-$Year Plant$-$Administration Costs and Other Data

$\backslash$table$[[,\backslash$table$[[$Total Plant$],[$Administration Costs$]],\backslash$table$[[$Ending Inventory$],[$Cost$]],$Plant Personnel,$\backslash$table$[[$Number of$],[$Customers$]],\backslash$table$[[$Total Direct$],[$Labor Costs$]],\backslash$table$[[\%$ of Plant$],[$Capacity Used$]]],[2003,$$$300,000,$$$90,000,122,1200,$$$520,000,70\%$