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EMI Corp Possible Applications Activity Based Costing
Term Paper ID:42492
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Essay Subject:
A short paper on the application of Activity Based Costing to the design and ...... More...
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3 Pages / 675 Words
0 sources, 0 Citations,
APA Format
$12.00
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Paper Abstract:
A short paper on the application of Activity Based Costing to the design and Installation of EMI equipment installations for data storage.
Paper Introduction:
Running head ACTIVITY BASED COSTINGEMI CorpPossible ApplicationsActivity Based CostingYour NameYour UniversityEMI Corp Possible ApplicationsActivity Based CostingIntroductionEMI produces storage systems and devices primarily for large InformationTechnology IT installations This activity involves a substantial amountof consulting by both sales personnel and specialized consultants who aretrained as System Engineers SE\'s and similar skills Both the consultingand installation phases of a major installation would be ideal venues forActivities Based Costing ABC Identify at least two activities for ABC and the appropriate cost driversfor those activities The
Text of the Paper:
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This is based on two weeks paid vacation and a five day 4 hourworkweek or 8 hours per workday. This would be anindividual cost element in each order. This activity involves a substantial amountof consulting by both sales personnel and specialized consultants who aretrained as System Engineers (SE's) and similar skills. It would be relatively easyto assign per hour costs to either of these based on base salary. Running head: ACTIVITY BASED COSTINGEMI CorpPossible ApplicationsActivity Based CostingYour NameYour UniversityEMI Corp Possible ApplicationsActivity Based CostingIntroductionEMI produces storage systems and devices primarily for large InformationTechnology IT installations. Travel expense and per diem per day would beadditional cost drivers for each employee involved in remote activities.These same cost drivers would be applicable to the design and specificationof the system and any software customization involved. The$5 , per year employee would cost out at $32.5 per hour (based salary$25/hr, benefits $7.5 /hr, total $32.5 ) including travel time or $26 perday. In practice, each employee would be individually costedbased on pay rate etc. The related benefits package probably runsapproximately 2 % to 3 % of the base salaries. Both the consultingand installation phases of a major installation would be ideal venues forActivities Based Costing (ABC).Identify at least two activities for ABC and the appropriate cost driversfor those activities.The two activities identified are the time and expenses of consultant andinstallation engineers in developing and installing the company's productsat a client's premises. This would eliminate acost center for that particular order so the pricing of the products couldbe adjusted accordingly. For the $8 , per year employee, thebase rate would be $4 /hour plus $12 per hour in benefits or $52 per hour,$416 per day. The cost drivers are primarily the salaries paidto the employees in first developing the proper configuration for theinstallation and then physically installing the hardware and software tomake the system functional.The SE's and the consultants would probably earn in the area of US$5 , to $8 , per year. If the client already had acomplete installation, it is very possible the IT staff or the client couldinstall additional hardware to expand the system.
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