A major equipment manufacturer has four plants located at different locations across India. It plans and executes the business travel for its workforce in each plant. Last year ₹ 32,00,000 were disbursed in travel expenses at a rate of ₹ 32,00,000/2,800 = ₹ 1,142.86 per employee.
| Location | Employees | Allocation |
| A | 900 | ₹ 14,00,000 |
| B | 750 | ₹ 8,50,000 |
| C | 600 | ₹ 5,50,000 |
| D | 550 | ₹ 4,00,000 |
The ERP system allocates the amount ₹ 32,00,000 using ABC method on the basis of number of travel vouchers, entitlement of travelers etc. In ABC terminology, the travel is an activity and the travel voucher is the cost driver. The following table indicates the details of distribution of 500 vouchers to each employee category, i.e., their entitlement. Use the ABC method to allocate travel expenses to each category of employee across all locations. Compare allocations for different locations based on workforce size and number of travel vouchers.
| Table 15.5 Distribution of travel vouchers among employees of different categories | ||||||
| Location | Employee Category | Total | ||||
| 1 | 2 | 3 | 4 | 5 | ||
| A | 25 | 50 | 75 | |||
| B | 70 | 35 | 35 | 140 | ||
| C | 80 | 35 | 30 | 145 | ||
| D | 140 | 140 | ||||
| Total | 175 | 85 | 35 | 30 | 175 | 500 |
