Advantages and Disadvantages of Activity Based Management on the Example of Profitability of Galvanized Pallet Nails
The cost was $420000 and cost driver volume of $110000. The cost per driver was (420000/110000) = 3.82. The units consumed 2817 hence the total cost apportioned was (3.82*2817) = 10755.82.Depreciation galvanizer was a cost pool with ton galvanized as the cost driver. The cost pool was $623000, the cost driver volume 45000. The cost per driver volume (623000/45000) = 13.84. The units consumed were 2817. Cost apportioned (13.84*2817) = 38999.8Depreciation of heading and threading cost pool had the cost of $57500 with a cost driver volume of 2817. The cost per volume was ($57500/2817) = 20.41. The number of units consumed is 2817. The total cost apportioned (20.41*2817) = 57500. The material handling had a number of moves as the cost driver. The cost incurred was $350000 and cost volume of 4500. The cost per driver volume (350000/4500) = 77.78. The units consumed was 21 leading to the total cost amounting to (77.78*21) = 1633.33.Dies retooling was cost pool that had tool shops hours cost driver. The cost incurred was $382000 with cost volume of 3300. The cost per volume (382000/3300) = 115.76. The numbers of units consumed were 13. The total cost apportioned was (115.76*13) = 1504.85.Wire drawing changeovers had a number of changeovers cost drivers. The cost was $272000 with 700 cost driver volume. The cost per driver volume was ($272000/700) = 388.57. The units consumed were 2 leading to a total cost apportioned to be (388.57*2) = 777.14.A quality inspection had the number of inspections as the cost driver. The cost of inspection incurred was $420000 with a cost driver volume of 1000. The cost per driver was computed as (420000/1000) = 420. The units consumed were 4 hence the total cost apportioned was (420*4) = 1680.Order processing had the number of orders as the cost driver. The cost incurred was $143000 with cost volume of 3000. The cost per driver was (143000/3000) = 47.67.