# Allied Paper Product

942 WordsAug 31, 20134 Pages
1. Answer The use of data given in the question to calculate ABC based service charges is presented in the following table: Activity | Cost as Per Question | Activity Driver | Activity DriverUnits | Activity Based Cost | Storage | 1550,000\$ | Number of Cartons | 350,000 | 4.43\$ | Requisition Handling | 1801,000\$ | Number of Requisitions | 310,000 | 5.81\$ | Basic warehouse stock selection | 761,000\$ | Number of Requisition Lines | 775,000 | 0.98\$ | Pick-pack Activity | 734,000\$ | Number of Lines requiring pick-pack | 697,500 | 1.05\$ | Data entry | 612,000\$ | Number of Requisition Lines | 775,000 | .79\$ | Desktop delivery | 250,000\$ | Number of Desktop Deliveries | 8,500 | 29.41\$ | Total | 5708,000\$ | | | | Note:- The activity driver unit for pick-up activity is calculated as: Number of requisitions estimated to be processed for 1992 = 310,000 Each requisition contains on average 2.5 lines so number of lines for 1992 = 310,000*2.5 = 775,000 Number of lines requiring pick-pack activity = 775,000*90% = 697,500 Note: All figures are rounded to nearest \$ 2. Answer Distribution service cost for “customer A” and for “Customer B” Activity | Activity Based Cost | Activity Driver | Activity DriverUnits | Distribution Cost | | | | Customer A | Customer B | Customer A | Customer B | Storage | 4.43\$ | Number of Cartons | 350 | 700 | 1,550\$ | 3,100\$ | Requisition Handling | 5.81\$ | Number of Requisitions | 364 | 790 | 2,115\$ | 4,590\$ | Basic warehouse stock selection | 0.98\$ | Number of Requisition Lines | 910 | 2,500 | 894\$ | 2,455\$ | Pick-pack Activity | 1.05\$ | Number of Lines requiring pick-pack | 910 | 2,500 | 958\$ | 631\$ | Data entry | .79\$ | Number of Requisition Lines | 364 | 790 | 719\$ | 1,974\$ | Desktop delivery | 29.41\$ | Number of Desktop Deliveries | - | 26 | - | 765\$ | Inventory handling | | | | |