1. What are the total budgeted costs for each activity and the total budgeted in
ID: 2391254 • Letter: 1
Question
1.
What are the total budgeted costs for each activity and the total budgeted indirect cost for March 2018 ?
2.
What are the benefits of using a Kaizen approach to budgeting? What are the limitations of this approach, and how might Family Mart management overcome them?
1.
What are the total budgeted costs for each activity and the total budgeted indirect cost for March 2018 ?
2.
What are the benefits of using a Kaizen approach to budgeting? What are the limitations of this approach, and how might Family Mart management overcome them?
The Rupert store of Family Mart, a chain of small neighborhood convenience stores, has a Kaizen (continuous improvement) approach to budgeting monthly activity costs for each month of 2018. Family Mart has three product categories: soft drinks (35% of cost of goods sold [COGS), fresh snacks (25% of COGS), and packaged food (40% of COGS). The following table shows the four activities that consume indirect resources at the Rupert store, the cost drivers and their rates, and the cost-driver amount budgeted to be consumed by each activity in January 2018. ? Click the icon to view the our activities and their cost data. O click the icon to view additional cost driver in a n Read the requirements. Requirement 1. What are the total budgeted costs for each activity and the total budgeted indirect cost for March 2018? Begin by calculating the budgeted cost-driver rates for February, then calculate March. (Round your answers to five decimal places, X.Xxxxx.) Budgeted Cost-Driver Rates Activity January FebruaryMarch Ordering Delivery Shelf-stocking Customer support 90.00 80.00 22.00 0.21Explanation / Answer
Solution:
Solution 2:
Kaizan is using activity based costing for allocation of cost to product. There are variaous benefits of activity based costing as under:
1. ABC approach provides actual cost of each product as cost is allocated on the basis of efforts made by each product in different activities.
2. Helps in determination of competitive prices for customer based on actual cost
3. This approach facilitate benchmarking
4. This approach integrates well with Six Sigma and other continuous improvement programs.
Limitations of ABC:
1. Difficult to understand as this approach is complicated.
2. Difficulty in identification of cost driver and their estimated costs.
3. Expansive approach.
Determination of budgeted cost of each activity and total indirect cost Activity Cost Driver Budgeted cost driver rate Soft drinks Fresh Snacks Packaged food Total Usage Allocated Costs Usage Allocated Costs Usage Allocated Costs Usage Allocated Costs Ordering Nos of purchase orders $90.00 13 $1,170.00 28 $2,520.00 13 $1,170.00 54 $4,860.00 Delivery Nos of deliveries $80.00 10 $800.00 67 $5,360.00 24 $1,920.00 101 $8,080.00 Shelf - Stocking Hours of stocking time $22.00 17 $374.00 172 $3,784.00 92 $2,024.00 281 $6,182.00 Customer support Nos of item sold 0.21 4100 $861.00 34800 $7,308.00 10900 $2,289.00 49800 $10,458.00 Total $3,205.00 $18,972.00 $7,403.00 $29,580.00Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.