Accounting for Managers: Interpreting accounting information for decision-making

(c)Product profitability 3: activity basedDriver

Total cost

No.

Cost each

Cryod

Genet

Yogen

Total

Purchase orders

700

100

7

40

10

50

(orders)

280

70

350

700

Set-ups

1,000

20

50

10

5

5

(batches)

500

250

250

1,000

Scheduling

1,000

40

25

10

20

10

(work orders)

250

500

250

1,000

Despatch

800

50

16

30

10

10

(deliveries)

480

160

160

800

Total

1,510

980

1,010

3,500

Cryod

Genet

Yogen

Total

Sales £’000

4,500

2,300

2,500

9,300

Contribution margin

2,100

760

1,350

4,210

Mfg overhead allocation

1,510

980

1,010

3,500

Gross profit

590

−

220

340

710

Less non-mfg overhead

600

Net profit

110

(continued overleaf

)