A Factory produces 3 types of shoes. While producing, for switching over from one type to another, there is a shift-over process involved. Costs incurred are as follows: 

Shift-over costs Rs. 50,000 

Factory Overheads Rs. 1,00,000/- 

Packing costs Rs. 20,000/- 

Engineering Costs Rs. 30,000/- 

Supervisor Costs Rs. 10,000/- 

Quantity produced A- 1000, B - 2000, C- 4000 

Allocate the costs to the 3 shoes (A, B and C) using Traditional Costing method and Activity Based Costing. Some other information of the 3 products is as under:

 Compare the results and the discuss.

Transcribed Image Text:

A No. of Switches Machine Hours No. of Receipts/packs Engineering Hours Supervisor Hours spent B 3 20 4 30 10 4 18 5 40 12 2 15 8 50 10 A No. of Switches Machine Hours No. of Receipts/packs Engineering Hours Supervisor Hours spent B 3 20 4 30 10 4 18 5 40 12 2 15 8 50 10

Answer rating: 100% (QA)

To allocate costs using the Traditional Costing method we will use a single allocation base such as the quantity produced units On the other hand for ... View the full answer