Financial Management 4Part A: Activity Based costing Introduction:Activity based costing is the costing method which assists the management of the companies to evaluate the activities which a company performs and then assigns the indirect cost to each product accordingly. This case explains about the US bright product company which produces cakes and pastries1. This case explains about the total cost per cake and the production cost of the company. Activity based costing method has been used to solve this case. In first section, cost per unit has been calculated through dividing the total cost according to the cost drivers. Further, bill of activities have been prepared and lastly, product cost for lamington and detail about extra cost have been given. Cost per unit of the company:In this section of the case, cost per unit has been calculated through dividing the total cost according to the cost drivers. Following is the calculations of the total cost per unit of thecompany:Calculations of Activity Based CostingActivityActivity costActivity driverAnnual quantityCost per unitPrepare annual cost $ 5,000 Process receivable $ 15,000 No of invoices $ 5,000 $ 3.00 Process Payable $ 25,000 No of purchase orders $ 2,500 $ 10.00 Program Production $ 28,000 No of production schedules $ 1,000 $ 28.00 Process sales order $ 40,000 No of sales orders $ 4,000 $ 10.00 Dispatch sales order $ 30,000 No of dispatches2 $ 2,500 $ 12.00 Develop and test $ Assigned directly to 1Robin, Cooper.Supply chain development for the lean enterprise: interorganizational cost management. Routledge, (2017).

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