question archive Q1 ?make Limited makes three main products , using broadly the same production methods and equipment for each
Q1 ?make Limited makes three main products , using broadly the same production methods and equipment for each
Subject:AccountingPrice: Bought3
Q1 ?make Limited makes three main products , using broadly the same production methods and equipment for each. A conventional product costing system is used at present, although an activity-based costing (ABC) system is being considered. Details of the three products for a typical period are : Materials per unit (Si) Volume units Direct labor costs $5 per hour and production overheads are absorbed on a machine hour basis .The rate for the period is $28 per machine hour. (a) You are required to calculate the cost per unit for each product using conventional methods . Further analysis shows that the total of production overheads can be divided as follows : % Costs relating to set-ups 35 Costs relating to machinery 20 Costs relating to materials handling 15 Costs relating to inspection 30 Total production overhead 100 The following activity volumes are associated with the product line for the period as a whole . Total activities for the period: No.of set—ups No. of movements of No.0]? inspections materials 75 12 150 ll 5 21 180 480 ST 67D 67B 120 1,000 You are required: (b) To calculate the cost per unit for each product using ABC principles.
