AMA

AMA

2. Ratlo Per unit 40F 3F SOF IF 16F Question 4 ABC Co. manufactures four products, namely A. B, C and D, using the same p and processes The following information relates to a production period Machin time Direct labour Materlal cost per unt Volume per unt Product per unit per unit 53 hour 5 hour 55 500 1% hour S hour $5 5.000 $12 1 hour 2 hour $16 6.00 $9 Ts hours T5 hours $17 7.000 Total production overhead recorded by the cost accounting system is analysed unde following headlinrs Factory overhead applicable to machine orlented activiry is $ 30,000 Set-up costs are $11.999 The cost of ordering materials is $ 1920 Handling materials $7560 Administration for spares parts-$8400 These overhead costs are absorbed by products on a machine hour rate of $4.80 per ho giring an overhead cost per product of: A $1.20, B-$1.20 C-$4.0, D-$7.20 However investigation into the production overhead activities for the period reveals t following totals Produrt Nmber of tlumber of natarial orders Number of time Materials w set apaeparts 5 to 3 12 Required L To compute an ovehead cost per product using activity-based costing, tracing overhe to prodaction units by means of cost drivers 2 To comment briedy on the differences discosed between overheads traced by the pres system and those traced by activiry based costing