Packit Ltd stores finished products in bulk on behalf of

Packit Ltd stores finished products in bulk on behalf of its customers. When the products are required for sale Packit Ltd packs them in accordance with its customers’ instructions. The company is currently in the process of determining budgeted costs by customer category for the forthcoming financial year.

Packit Ltd categorises its customers according to the relative fragility of their products. It has three customer categories: Robust, Standard and Delicate. As the names suggest, the customers in the Robust category have the most resilient products, the customers in the Delicate category have the most fragile products and the products of the customers in the Standard category fall between those two extremes.

The volume of work performed for each category of customer is measured in terms of cubic metres of product handled. The budgeted volumes by customer category for the forthcoming financial year are as follows:

Robust

Standard

Delicate

Budgeted volume of products to be handled

90,000

135,000

75,000

(in cubic metres)

Budgeted packaging costs for the forthcoming financial year in respect of each of the customer categories have been determined as follows: Robust: €990,000, Standard: €1,957,500 and Delicate: €1,875,000.

Other operational costs for the forthcoming period have been budgeted to be as follows:

Labour – basic hours

€1,050,000

Labour – overtime hours

€90,000

Occupancy

€1,500,000

Clerical and administration

€180,000

Activity Based Review

An activity based review of the company’s operations has identified three key activities: Receipt and Inspection, Warehousing and Packing. It has been determined that it would be reasonable to allocate operational costs to these key activities in the following proportions:

Receipt & Inspection

Warehousing

Packing

Labour – basic hours

20%

15%

65%

Labour – overtime hours

45%

20%

35%

Occupancy

25%

65%

10%

Clerical and administration

50%

5%

45%

The activity based review has also revealed that the degree of fragility of the products drives the amount of time required for Receipt and Inspections, that the demands on Warehousing are driven by the average floor space required per unit of product held for the customer category and that the time taken for Packing reflects the complexity of customers’ packaging specifications. The requirements per cubic metre of product for each customer type have been assessed to be as follows:

Robust

Standard

Delicate

Receipt and Inspection (minutes)

4

8

16

Floor space (square metres)

0.5

1

0.6

Packing (minutes)

20

40

60

  • Requirement _

(a) Calculate the budgeted average cost per cubic metre of product stored and packaged for each of the three customer categories, without using the Activity Based information provided.

(b) Using the Activity Based information provided, calculate the budgeted average cost per cubic metre of product stored and packaged for each of the three customer categories. You may round your calculations to two decimal places.

(c) Suggest how activity based costing may improve product costing and control within Packit Ltd.

How Our Website Works

1. FILL IN OUR SIMPLE ORDER FORM

It has never been easier to place your order. Fill in the initial requirements in the small order form located on the home page and press “continue” button to proceed to the main order form or press “order” button in the header menu. Starting from there let our system intuitively guide you through all steps of ordering process.

2. PROCEED WITH THE PAYMENT

All your payments are processed securely through PayPal. This enables us to guarantee a 100% security of your funds and process payments swiftly.

3. WRITER ASSIGNMENT

Next, we match up your order details with the most qualified freelance writer in your field.

4. WRITING PROCESS

Once we have found the most suitable writer for your assignment, they start working on a masterpiece just for you!

5. DELIVERY

Once finished, your final paper will be available for download through your personal dashboard. You will also receive an email notification with a copy of your paper attached to it. Sometimes, the writer may leave a note for you about the order in case there is any additional information that they need to give you.

Leave a Reply

Your email address will not be published.