DEPARTMENT OF BUSINESS STUDIESACCOUNTING SECTIONPAPUA NEW GUINEA UNIVERSITY OF TECHNOLOGYSEMESTER TWO – 2019BA 214: Cost Accounting II Assignment 2, Due 30th September 2019Instructions.1. The assignment accounts for 10% of your assessment.2. Plagiarism is subject to forfeiture of all assessment mark awarded in thisassignment.3. Late submission will carry a penalty of losing 10% of the marks per day.4. Medical certificate prior to two days of the due date will be rejected.5. All are encouraged to hand in tidy work.Question. ABC Costing; ABMTaylors Cheesecakes supplies cheesecakes to three large supermarket chains.Management has become concerned about the rising costs associated with the processing anddispatch of orders. An activity analysis of the indirect costs identified the following customerrelated costs.Total Use of cost driverExpected Use SupermarketEstimated Of Cost CustomerActivity cost pool Cost Driver Indirect Costs Driver* 1 2 3Orders processing Number of Orders PGK 200,000.00 450 300 100 50Returns processing Number of Returns PGK 50,000.00 100 50 25 25Delivery Number of Deliveries PGK 100,000.00 700 400 200 100Rush Orders Number of rush orders PGK 70,000.00 50 10 20 20Sales Visits Number of visits PGK 20,000.00 100 50 25 25* Expressed in units of measure of the driver.Sales are marked up 50% on costs.Required.
a. Calculate the activity cost rate for each activity.
b. Assign the activity costs to each of the three customers.
c. Calculate the contribution margin for each customer if the sales pattern for each is asfollows: Customer 1 – PGK300,000.00; Customer 2 – PGK150,000.00; Customer 3 –PGK200,000.00.