(Solved): How do you calculate a driver rate? What is the difference between absorption costing and activity- ...

How do you calculate a driver rate?

What is the difference between absorption costing and activity-based costing?

What does it mean to have a driver rate of 200 Euro per set up cost? Assume the total set-up cost is 2000 Euro

Company Happy produces ONLY two products: Sunshine and Rain. The analysis of the overheads for the MONTH were as follows: Pool of costs Total costs for the month Drivers Set-up costs 18,000.00 No. of set-ups Invoicing costs 40,000.00 No. of invoices Handling costs 45,000.00 No. of movements Insurance costs 7,500.00 Days spent in warehouse Special parts costs 12,000.00 No. of special parts Other overheads 30,000.00 Direct labour hours Total overheads 152,500.00 Information regarding the individual products: Sunshine Rain Total monthly units produced 400 800 Direct labour hours per unit 3 6 Direct material 7 15 15 22 Direct labour cost per hour No. of set-ups per batch 9 4 No. of units in batch. 20 100 No. of batches 20 8 No. of invoices per month 20 30 No. of movements per batch 2 5 Days spent in warehouse 18 7 No. of special parts per unit 10 8 Required: Calculate the full cost of one unit of Sunshine and one unit of Rain, using activity-based costing Total costs Total driver units: Driver rates: Set-up costs Invoicing costs Handling costs Insurance costs Special parts costs Other overheads Full cost Calculation Sunshine Rain calculation per unit of sunshine per unit Direct materials Direct labour Indirect costs: Set-up costs Invoicing costs Handling costs Insurance costs Special parts costs Other overheads Total costs of individual units What are the full costs of Sunshine and Rain for Company Happy?