Assessment Task (Activity Based Costing)

US Bright produces a list of the activities performed at Cravings for cakes and their annual costs. In addition, Bright identifies an activity driver for each activity and the annual quantity of each activity driver. A partial list of activity costs and quantities of activity drivers is shown below:

Cravings for Cakes list of Activities
Activity Activity Cost ($) Activity Driver Annual Quantity of Activity driver
Prepare Annual Accounts 5000 None Available
Process receivables 15000 No. of Invoices 5000 Invoices
Process payables 25000 No. of purchase orders 2500 Purchase orders
Program production 28000 No. of production schedules 1000 schedules
Process Sales order 40000 No. of sales orders 4000 sales orders
Dispatch sales order 30000 No. of dispatches 2500 dispatches
Develop and test products 60000 Assigned directly to products
Load mixers 14050 No. of batches 1000 batches
Operate mixers 45900 No. of kilograms 200000 kilograms
Clean mixers 6900 No. of trays 1000 batches
Move mixture to filling 3450 No. of cakes/pastries 200 000 kilograms
Clean trays 20000 No. of trays 16000 trays
Fill trays 16000 No. of cakes/pastries 800,000 cakes/pastries
Move to baking 8000 No. of trays 16,000 trays
Set up ovens 50000 No. of batches 1000 batches
Bake Cakes/Pastries 130000 No. of batches 1000 batches
Move to packing 40000 No. of trays 16,000 trays
Pack cakes/pastries 80000 No. of cakes/pastries 800,000 cakes/pastries
Inspect pastries 2500 No. of pastries 50,000 pastries

Required: Construct an Excel spreadsheet to

  1. Calculate the cost per unit of activity driver for the activities listed.
  2. Based on the information in the following table, prepare a bill of activities and determine the cost per unit for Lamington.
  3. What other costs must be added to calculate the product cost for Lamington?
Lamington (Batch Size 1000; Annual Volume 100,000)
Activity Consumed Annual Quantity of Activity Driver
Process Receivables 500 Invoices
Process Payables 200 Purchase Orders
Program Production 100 Production Schedules
Process Sales Order 400 Sales Orders
Load Mixers 100 Batches
Operate Mixers 30 000 Kilograms
Clean Mixers 100 Batches
Move mixture to filling 30 000 Kilograms
Clean trays 2000 trays
Fill trays 100 000 cakes
Move to baking 2000 trays
Set up ovens 100 Batches
Bake cakes/pastries 100 Batches
Move to packing 2000 trays
Pack Cakes/Pastries 100 000 cakes
Dispatch Sales Order 500 Sales orders
Develop and Test product $600 assigned directly to this product

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