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Classic Pen
Question 1:
Calculate the revised product cost for the four pens, based on the activity information collected by Dempsey: Activities Indirect labour Computer system
Scheduling / production runs 50% 80%
Physical changeover 40%
Record maintenance 10% 20%

Activity cost pool Activity measures
Scheduling / production runs No of runs
Physical changeover No of hours
Record maintenance No of hours Scheduling / production runs Physical changeover Record maintenance Machine capacity Total Indirect labour 50% 40% 10% 100%
Computer system 80% 0 20% 100%
Fringe benefits 50% 40% 10% 100%
Machinery 0% 0% 0% 100% 0%
Maintenance 0% 0% 0% 100% 0%
Energy 0% 0% 0% 100% 0%

Scheduling / production runs Physical changeover Record maintenance Machine capacity Total cost
Indirect labour 10,000 8,000 2,000 - 20,000
Computer system 8,000 - 2,000 - 10,000
Fringe benefits 4,000 3,200 800 - 8,000
Machinery - - - 8,000 8,000
Maintenance - - - 4,000 4,000
Energy - - - 2,000 2,000
Total cost 22,000 11,200 4,800 14,000 52,000 Total activity 150 526 4 10000 Activity rate 146.67 21.29 1,200.00 1.40 PRODUCT COST WORKINGS Blue Black Red Purple Total Production units 50,000 40,000 9,000 1,000 100,000 Production run hours 50 50 38 12 150 Set up time 200 50 228 48 526 Parts admin 1 1 1 1 4 Machine hours 5,000 4,000 900 100 10,000 Revised product cost Sales 75000 60000 13950 1650 150600 Materials 25,000 20,000 4,680 550 50,230 Direct labour 10,000 8,000 1,800 200 20,000

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