Activity Based Costing for Animal Shelter Management

PRACTICAL AND WRITTEN GROUP ASSESSMENT COVER SHEET
FOUNDATIONS OF MANAGEMENT ACCOUNTING- ACCT20076
Campus: CQU, Sydney
Workshop date: 13 September
S.NO Student ID Family name First name
1 12084727 Gurung Arijit
2 12066556 Rana Manisha
3 12069330 Tamang Meera
4 12062389 Khatri Chhabilal
5 12064134 Shrestha Susita
Submitted to: Richard Edward Goldman

Executive Summary
The following report presentation contains a discussion on activity based costing. The method of
ABC has been applied on the cost data of animal shelter in order to help the management of the
shelter take necessary decisions.
The calculations done in the report presentation will help the user to understand the nature of
cost and activities. Application of Activity based costing gives the users a detailed insight into the
cost data, which helps in better decision making.
The following discussion includes analysis of cost data of Baulkham Hills Shire Council. The
results of the analysis are expected to help the management have a better understanding of cost
incurred on various functions.
The costing system uses only one cost driver, which allocates the cost unevenly among the
divisions (Boyd,2013).
Activity based costing is another cost allocation method which allocates the joint overhead costs
based on actual usage of the activities.
The animal shelter has three major divisions.
- Animal Shelter
- Director and Training
- Veterinarian Clinic
We have been provided with cost incurred by the shelter. Using the cost data and other
information collected, we will calculate the costs which are attributable to the divisions
individually.

Calculation of cost allocation under the costing system:
* total indirect cost = 20000+60000+40000= $300000
Under the costing system, all indirect cost are allocated based on one cost attribute. In the given scenario
it is square foot occupied by each division. Using this we have:
- animal shelter: indirect cost per unit= 150000/5000=$30, direct cost per unit = 150000/5000 = $30.
-veterinarian clinic: indirect cost per unit = 60000/2000= $30, direct cost per unit =225000/2000= $113
-training: indirect cost per unit= 90000/3000.
we have then divided the total cost by the unit of each division:
- animal shelter= 150000/4500= $67 per animal housed
- clinic= 285000/5000= $57 per animal nursed
- training= 9000/125= $720 per meeting
Particulars
Animal Shelter Veterinarian Clinic Training
Total Cost4500 5000 125
Total Per Sq Ft Total Per Sq Ft Total Per Sq Ft
Direct Labour 1,00,000 1,50,000 - 2,50,000
Direct Material 50,000 75,000 - 1,25,000
Total Direct 1,50,000 30 2,25,000 113 - - 3,75,000
Indirect cost allocated 1,50,000 30 60,000 30 90,000 30 2,10,000
Total cost 3,00,000 67 2,85,000 57 90,000 720