A Company manufactures three products P, Q and R. The cost information extracted from the companys records
Question:
A Company manufactures three products P, Q and R. The cost information extracted from the company’s records is provided below :
P Q R
Budgeted Production Volume (in Units) 4000 6000 2500
Direct Material Cost per unit @ RO 10per Kg 25 35 40
Labour Hours per unit 1.5 2 1
Direct Labour Cost per unit @ RO 15 per hour 22.5 30 15
Other Direct Expenses per unit 10 15 20
The company’s overheads of RO 1,025,000 can be identified with five major activities. The relevant data of these activities is as follows :
Major Activities | Overheads(in RO) | Cost Driver | Activity Capacity | Product P | Product Q | Product R |
Ordering Cost | 200,000 | No. of orders processed | 2,000 | 400 | 1,200 | 400 |
Receiving Cost | 150,000 | Number of parts | 750 | 250 | 200 | 300 |
Machining Cost | 300,000 | Machine Hours | 30,000 | 7,000 | 9,000 | 14,000 |
Inspection Cost | 125,000 | Inspection Hours | 1,000 | 200 | 500 | 300 |
Set-Up Costs | 250,000 | No. of Set-Ups | 250 | 75 | 125 | 50 |
1,025,000 |
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer