Absorption costing is used for all outside reports. All non-direct fixed
costs are allocated using various allocation bases as indicated
throughout the project. The Company does not use a full ABC costing
system; however, it does employee some of the ABC concepts in the
budgeting process.
The administrative department handles all of the purchasing,
accounting, and secretarial duties in a highly efficient manner. The
need for separate departments is not necessary at this time.
2005 INFORMATION
SUPER STUPENDOUS
DEPARTMENT DEPARTMENT
Number of machines available 26 20
Annual capacity per machine 15,000 gallons 15,000 gallons
Annual production capacity 390,000 gallons 300,000 gallons
Machine hours available per machine 1,800 hours 1,800 hours
Standard machine hour per gallon .12 hour/gallon .12 hour/gallon
Standard labor hour per machine hour 1.25 labor hr/mach.hr 1.25
labor hr/mach.hr
Actual sales volume 420,000 gallons 268,200 gallons
Number of hourly employees 29 21
Supervisors (one per each eight hourly
employees) 4 3
Raw material prices
Cans 40¢ each 40¢ each
Pigment $2.75 per pound $3.75 per pound
Raw material usage
Cans one per gallon one per gallon
Pigment two pounds per gallon two pounds per gallon
Direct labor rate $8.25 per hour $8.25 per hour