The Kalahari Company has received a request for a price quotation from one of its regular customers for an order of 500 units with the following characteristics:
|
Direct labour per unit produced |
2 hours |
|
Direct materials per unit produced |
£22 |
|
Machine hours per unit produced |
1 hour |
|
Number of component and material purchases |
6 |
|
Number of production runs for the components prior to assembly |
4 |
|
Average set-up time per production run |
3 hours |
|
Number of deliveries |
1 |
|
Number of customer visits |
2 |
|
Engineering design and support |
50 hours |
|
Customer support |
50 hours |
Details of the activities required for the order are as follows:
|
Activity |
Activity cost driver rate |
|
Direct labour processing and assembly activities |
10 per labour hour |
|
Machine processing |
£30 per machine hour |
|
Purchasing and receiving materials and |
|
|
components |
£100 per purchase order |
|
Scheduling production |
£250 per production run |
|
Setting-up machines |
£120 per set-up hour |
|
Packaging and delivering orders to customers |
£400 per delivery |
|
Invoicing and accounts administration |
£120 per customer orde |
|
Marketing and order negotiation |
r £300 per customer visit |
|
Customer support activities including after |
|
|
sales service |
£50 per customer service hour |
|
Engineering design and support |
£80 per engineering hour |