Activity Based Costing 13 Essay

2260 Words Nov 27th, 2010 10 Pages
Running head: ACTIVITY BASED COSTING CASE

Activity Based Costing Case
David Welch
University of Phoenix
Accounting Capstone
ACC/594
Tom Myers
February 1, 2010

The selection of the right cost calculation method is of critical importance when it comes to determining the real product profitability. Activity Based Costing is one approach that can be used. Activity based costing is a managerial accounting system that determines the cost of activities without distortion and provides management with relevant and timely information (Dunn, 2009). This paper will briefly summarize Colombo’s competitive environment and General Mills strategy in response to that environment, using the ABC analysis, Team A will determine new segment
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300,000.00 300,000 60,000 240,000
Individual Cases Cases 2,700,000.00 1,200,000 1,140,000 60,000
Total Pick/Pack shipping Cases 3,000,000.00 1,500,000 1,200,000 300,000 Total Cost of Goods Sold: 17,250,000.00 Actual Use
Activity Cost Pools Cost of of Cost Drivers ABC Goods Sold Per Activity COGS per case
Ingredient, Packaging and Storage 14,250,000.00 1500000 9.5
Pick/Pack Shipping Costs:
Cases in full pallets 300,000.00 300000 1
Individual Cases 2,700,000.00 1200000 2.25
Total Pick/Pack shipping Cases 3,000,000.00 1500000 Cost Drivers per Segment:
Activity Cost Pools Impulse ABC Yogurt Shops ABC COGS Segment Cases COGS per case COGS Assigned Segment per Case COGS Assigned Total
Ingredient, Packaging and Storage 1200000 9.5 11,400,000.00 300000 9.5 2,850,000.00
Pick/Pack Shipping Costs:
Cases in full pallets 60000 1 60,000.00 240000 1 240,000.00
Individual Cases 1140000 2.25 2,565,000.00 60000 2.25 135,000.00
Total Pick/Pack shipping Cases 1200000 2,625,000.00 300000 375,000.00 Total Cost Assigned for each segment: 14,025,000.00 3,225,000.00 17,250,000.00 AB C Analysis of Merchandising: Actual Use of Total Cost Drivers per Product
Activity Cost Pools Merchandise Cost Drivers Impulse Yogurt Cost Drivers Costs Per

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