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Subtitie 2 5 HA1-chapter12 (Home assignment #1 based on the Richards book, Chapter 12, warehouse costs) Exercise 3. Activity-based vs. traditional costing Please use table 12.4 on page 355 of the Richards book for this exercise. Assume that it represents an accurate picture of costs in the warehouse by customer based on activities. Now lets compare it to traditional costing. 8. If under traditional costing all management overhead A were allocated only to storage space (number of pallets) and not to handling cost drivers (labor and MHE), which customer would be getting the most free ride (the highest number of free, unpaid management hours)? 9. How many free management hours would that customer get? 10. Which customer would be the most disadvantaged (the highest number of paid unused management hours)? 11. How many management hours would that customer pay for and not use? Pages: 2012 | Words: 181 of 308 I),
Table 12.4 page 355 is below


TABLE 124 Example ABC model Space Labour MHE (no of (no of No. of Administration Management B Other pallets) hours) hours hours 10,000 120,000 30,000 10,000 hours 20,000 hours 100% pallets hours hours 2,000 20,000 5,000 Overhead A Overhead hourscosts Total capacity Customer A Customer B Customer C Customer ID Customer BE Customer F Operational leeway/unproductive 500 200 200 100 1,000 1,400 25,000 8,000 2,000 900 18,000 4,500 2,500 2,300 21800 3,000 1500 1,000 12,000 1,900 1000 1,500 18,000 5,000 1,000 1,000 2,000 3,500 5,000 1000 500 4,000 5% 10% 20% 25% 15% 10% Unused capacity 700 5,000 2500 500 3,000 15% The-above hours can be further broken down into the individual activities within the warchouse and the costs allocated by customer. These costs can then be compared to the actual charges levied to the customer and any shortfall examined. We can also calculate the total handling and storage cost per
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