Activity Based Costing Chapter 1

How to calculate totals cost on original basis:

Cost driver rates:
Accounts preparation and
advice
Requesting missing
information
Issuing fee payment
reminders
Holding client meetings $60,000/250 meetings = $240 per
Travelling to clients $40,000/10,000 miles = $4 per mile
Client costs:
$580,000/18,000 hours = $32.222 per
hour
$30,000/250 times = $120 per request
$15,000/400 times = $37.50 per
reminder
meeting
Accounts preparation and advice $32,222 $8,055 $10,955
Requesting missing information $480 $1,200 $720
Issuing fee payment reminders $75 $300 $375
Holding client meetings $960 $240 $480
Travelling to clients $600 $2,400 $0
––––––– ––––––– –––––––
Total costs $34,337 $12,195 $12,530
Total costs on original basis (*) $40,280 $10,070 $13,695
Client fees – new basis (W1) $41,204 $14,634 $15,036
Client fees – original basis $48,336 $12,084 $16,434
Increase/(Decrease) $(7,132) $2,550 $(1,398)
(*) $725,000/18,000 hours = $40.28 per hour