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    Frias ABC System

    Uploaded by

    Lars Frias
    This document presents three methods for calculating the bid price for a strategic cost management project: direct method, step method, and algebraic method. Under each method, the document shows the cost allocation for maintenance, power, cooking, and packaging/freezing cost centers. It then calculates the overhead rate and unit cost to arrive at a bid price of $49.12 for the direct method, $48.50 for the step method, and $48.60 for the algebraic method.

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    Frias ABC System

    Uploaded by

    Lars Frias
    20 views2 pages
    This document presents three methods for calculating the bid price for a strategic cost management project: direct method, step method, and algebraic method. Under each method, the document shows the cost allocation for maintenance, power, cooking, and packaging/freezing cost centers. It then calculates the overhead rate and unit cost to arrive at a bid price of $49.12 for the direct method, $48.50 for the step method, and $48.60 for the algebraic method.

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    This document presents three methods for calculating the bid price for a strategic cost management project: direct method, step method, and algebraic method. Under each method, the document shows the cost allocation for maintenance, power, cooking, and packaging/freezing cost centers. It then calculates the overhead rate and unit cost to arrive at a bid price of $49.12 for the direct method, $48.50 for the step method, and $48.60 for the algebraic method.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    20 views2 pages

    Frias ABC System

    Uploaded by

    Lars Frias
    This document presents three methods for calculating the bid price for a strategic cost management project: direct method, step method, and algebraic method. Under each method, the document shows the cost allocation for maintenance, power, cooking, and packaging/freezing cost centers. It then calculates the overhead rate and unit cost to arrive at a bid price of $49.12 for the direct method, $48.50 for the step method, and $48.60 for the algebraic method.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    STRATEGIC COST MANAGEMENT

    DIRECT METHOD

    Maintenance Power Cooking Packaging Total


    and
    Freezing
    340,000 200,000 75,000 55,000 670,000
    Maintenance (340,000) 226,667 113,333
    Power (200,000) 111,111 88,889
    Total 0 0 412,778 257,222 670,000

    40,000/2 = 20,000
    = 412,778/20,000 = 20.64
    30,000/0.5 = 60,000

    = 257,222/60,000 = 4.29
    20.64 + 4.29

    OH = 24.93

    DM – 16
    DL – 16
    OH – 24.93
    UC = 40.93 x 1.2

    Bid Price = ₱49.12

    STEP METHOD

    Maintenance Power Cooking Packaging Total


    and
    Freezing
    340,000 200,000 75,000 55,000 670,000
    Maintenance (340,000) 136,000 136,000 68,000
    Power (336,000) 186,667 149,333
    Total 0 0 397,667 272,333 670,000
    397,667/20,000 = 19.88
    272,333/60,000 = 4.54
    OH = 19.88 + 4.54 = 24.42

    PC = 16
    OH = 24.42
    UC = 40.42
    40.42 x 1.2

    Bid Price = ₱48.50

    ALGEBRAIC METHOD

    Maintenance Power Cooking Packaging Total


    and
    Freezing
    OH 340,000 200,000 75,000 55,000 670,000
    Maintenance (375,000) 150,000 150,000 75,000
    Power 35,000 (350,000) 175,000 140,000
    Total 0 0 400,000 270,000 670,000

    400,000/20,000 = 20
    270,000/60,000 = 4.5
    OH = 20 + 4.5 = 24.5

    PC = 16
    OH = 24.5
    UC = 40.5
    40.5 x 1.2

    Bid Price = ₱48.60

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