small campaigns
ABC or Activity-Based Costing
Total cost for small campaigns: 325000 + 835714 + 337500 = $1498214
Cost for large campaigns: 325000 + 64286 + 112500 = $501786
Creative: $500000 + $150000 = $650000
Small campaigns = (400/ 800 * 650000) = $325000
Large campaigns = (400/ 800 * 650000) = $325000
Production Staff: $750000 + $150000 = $900000
Small campaigns = (325/ 350 * 900000) = $835714
Large campaigns = (25/ 350 * 900000) = $64286
Administration &support staff: $300000 + $150000 = $450000
Small campaigns = (300/ 400 * 450000) = $337500
large campaigns = (100/ 400 * 450000) = $112500
800 (400 small +400 large) advertisements =$500000
Meaning that, for small advertisement= 0.125 X $500000=$62500
For large advertisement = 0.875 X $500000 = $437500
The large advertisement that were successful, =25/400 X $437500 = $27343.75
The small advertisement that were successful, = 325/400 X $62500 = $50781.25
Total creative staff overhead = ($27343.75+ $50781.25) = $78125
Production staff = $750000
Rental and associated costs = $450,000
Administrative & support staff =$300,000
The advertising costs =$2000000
Small campaign: ((1498214 – 1300000) / 1300000) * 100% = 15.25%
Large campaign: ((700000 – 501786) / 700000) * 100% = -28.32%
Reference
Cokins, G. (2001). Activity-based cost management: An executive’s guide. New York: Wiley.
Hicks, D. T. (2002). Activity-based costing: Making it work for small and mid-sized companies.
Horngren, C. (2017). Cost accounting. [S.l.]: Pearson.
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small campaigns was first posted on October 26, 2019 at 3:01 pm.
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