Details of the four products and relevant information are given below for the recent accounting period....
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Details of the four products and relevant information are given below for the recent accounting period. Particulars Output (units) Direct material cost per unit Direct labour time per unit (minutes) Direct labour cost per hour Machine hours per unit Average items in inventory P 125 $30 75 $18 5 15 Q 150 $40 65 $24 4 12 Particulars Machine department costs Set-up costs Storage costs Inspection costs Handling and dispatch costs R 175 $50 55 $18 3 6 Amount ($) 20,500 4,880 $4,095 $1,607 $8,325 S 150 Products P and Q are usually produced in production runs of 15 units while products R and S are usually produced in production runs of 10 units. Products P and R are sold in batches of 10 units while products Q and S are sold in batches of 15 units. The production overheads are currently absorbed by using a machine hour rate. For an activity-based analysis, you classified the total of the production overheads as follows: $60 45 $24 2 9 You have identified number of production runs as cost driver for set-up costs and inspection costs. Average number of items in inventory was identified as cost driver for storage costs, and number of orders executed was identified as cost driver for handling and dispatch costs. Required: (a) Calculate the activity cost driver rate for all activity cost pools identified as part of overheads. (b) Calculate the total cost and cost per unit for each product using activity-based costing. Details of the four products and relevant information are given below for the recent accounting period. Particulars Output (units) Direct material cost per unit Direct labour time per unit (minutes) Direct labour cost per hour Machine hours per unit Average items in inventory P 125 $30 75 $18 5 15 Q 150 $40 65 $24 4 12 Particulars Machine department costs Set-up costs Storage costs Inspection costs Handling and dispatch costs R 175 $50 55 $18 3 6 Amount ($) 20,500 4,880 $4,095 $1,607 $8,325 S 150 Products P and Q are usually produced in production runs of 15 units while products R and S are usually produced in production runs of 10 units. Products P and R are sold in batches of 10 units while products Q and S are sold in batches of 15 units. The production overheads are currently absorbed by using a machine hour rate. For an activity-based analysis, you classified the total of the production overheads as follows: $60 45 $24 2 9 You have identified number of production runs as cost driver for set-up costs and inspection costs. Average number of items in inventory was identified as cost driver for storage costs, and number of orders executed was identified as cost driver for handling and dispatch costs. Required: (a) Calculate the activity cost driver rate for all activity cost pools identified as part of overheads. (b) Calculate the total cost and cost per unit for each product using activity-based costing.
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ANSWER a Calculation of Activity Cost Driver Rate For Setup costs and Inspection costs Total Setup costs 1607 Total Inspection costs 8325 Total number ... View the full answer
Related Book For
Management Accounting
ISBN: 9781760421144
7th Edition
Authors: Kim Langfield Smith, Helen Thorne, David Alan Smith, Ronald W. Hilton
Posted Date:
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