Xavier company manufactures many products. Each product passes through two production departments, which have the following cost structures: 

(a). Calculate the unit cost of each of these jobs on a full costing basis. 

(b). Recalculate unit costs on a variable costing basis. 

(c). Why are the relative variable costs of these two products so different from their relative full costs?

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Normal monthly volume (based for overhead rate) Monthly fixed costs at normal volume Monthly variable costs at normal volume Rs. 10,000 15,000 Two job orders that went through the factory last month had the following results: Job I (Product X) Quantity Direct inputs: Direct materials Direct labour: Output Department A 5,000 direct labour hours Department A Department B 480 lbs 180 hrs 60 hrs 600 units Cost (Rs.) 2,400 1,620 420 Department B 10,000 pounds of materials Rs. 40,000 20,000 Job 2 (Product Y) Quantity 1,500 lbs 100 hrs 40 hrs 1,000 units Cost (Rs.) 4,800 900 280