Azu-Cena Ltda is a manufacturer of motorcycles. Production and cost data for 2022 are as follows: Units
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Azu-Cena Ltda is a manufacturer of motorcycles. Production and cost data for 2022 are as follows:
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Units produced Direct manufacturing labour-hours per unit Machine-hours per unit 500 cc model 1000 cc model 10 000 2 20 000 4 8 8 A single cost pool is used for manufacturing overhead. For 2022, manufacturing overhead was 6.4 million. Azu-Cena allocates manufacturing overhead costs to products on the basis of direct manufacturing labour-hours per unit. Azu-Cena's accountant now proposes that two separate pools be used for manufacturing overhead costs: Machining cost pool (3.6 million in 2022) General plant overhead cost pool (2.8 million in 2022). Machining costs are to be allocated using machine-hours per unit. General plant overhead costs are to be allocated using direct manufacturing labour-hours per unit. Required 1 Calculate the overhead costs allocated per unit to each model of motorcycle in 2022 using the current single-cost-pool approach of Azu-Cena. 2 Calculate the machining costs and general plant overhead costs allocated per unit to each model of motorcycle assuming that the accountant's proposal for two separate cost pools is used in 2022. 3 What benefits might arise from the accountant's proposal for separate pools for machining costs and general plant costs?
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Related Book For
Management And Cost Accounting
ISBN: 9781292436029
8th Edition
Authors: Alnoor Bhimani, Srikant Datar, Charles Horngren, Madhav Rajan
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