Topic: Activity Based Costing (ABC)

Pluto is a chocolate manufacturer that produces three products:

• Sky Bar
• Moon Egg
• Sun Bar

Information relating to each product is as follows:

Sky Bar Moon Egg Sun Bar

Direct labour cost per unit ($) 0.07 0.14 0.12

Direct material cost per unit ($) 0.17 0.19 0.16

Actual production/Sales (units) 500,000 150,000 250,000

Direct labour hrs per unit 0.001 0.01 0.005

Direct machine hrs per unit 0.01 0.04 0.02

Number of production setups 3 1 26

Number of components 4 6 20

Number of customer orders 21 4 25

Additional information:

Machining cost ($) 5,000

Component cost ($) 15,000

Set-up cost ($) 30,000

Packing cost ($) 30,000

Production overhead 80,000

Required:

1. Calculate the cost driver rate for each activity
2. Calculate the full production cost per unitand the profit per unitfor each product.