Bombay dyeing produces various cotton-based products and one of the products lines is bed sheets. The...

 

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Bombay dyeing produces various cotton-based products and one of the products lines is bed sheets. The company produces three categories of bed sheets based on the market segments: Regular, Standard, and Deluxe. Its cost accounting system applied conversion costs using a plant-wide application rate using sum of material and labour cost as the cost driver. The company is thinking of employing an ABC system for conversion costs. Company concluded that its plant had six activities and costs budgeted for the upcoming year are as follows: Activity Area Material and Coloring Cost Block and Design Procurement Cost Machine Setups Cost Depreciation & Maintenance Cost Labour Cost Packaging & Shipping Cost Other Cost Total Particulars Fabric (meters) Cost per Meter of material and colouring Material handling and coloring cost include the cost of the raw material procured and after procurement the company color the white material into different colors as per the requirements, Cost details for three categories are as follows: Particulars Units to be produced Machine hours (per unit) No. of Blocks and Design Procured. No. of machine set ups Regular 2.5 Rs. 60 After coloring the company put the colored sheet for printing purposes. Sheets are printed in different designs therefore the company has to procure deferent blocks and design to printed specific sheets. Sheets of the same designs are printed in batches and to produce a batch first they have to set up a machine as per the given design and thereafter printing of sheets happens. Printed sheets are then washed hard to fasten the colors and ironed thereafter. The cost of washing and ironing is included in the other costs. Finally, as per the orders, sheets are packed and shipped. Irrespective of the no. of sheets, packaging and shipping cost per order remain the same. The cost of different bedsheet using ABC. Activity Material and Coloring Cost Block and Design Procurement Cost Machine Setups Cost Depreciation & Maintenance Cost Company follows standard costing method for pricing purpose and for this month company summarizes following information regarding projections of the activities performed for all three categories: Labour Cost Packaging & Shipping Cost Other Cost Total Units Per unit cost Regular 10,000 3 100 75 Budgeted Costs 235,12,000 1,14,000 1,60,000 z 35,10,000 210,92,000 1,90,000 250,00,000 135,78,000. 2 1,000 Cost Driver Standard 3 Rs. 100 Regular Standard 5.000 5 50 Labor Hours per unit. Orders shipped You are required to fill in the boxes under Question 4. Refer attached Answer sheet.. Following tables assists you to fill the boxes for Q4. Activity Area Block and Design Procurement Cost Machine Setups Cost Depreciation & Maintenance Cost Labour Cost Packaging & Shipping Cost Other Cost Deluxe 3,2 Rs. 200 25 5 2,000 Deluxe 800 7 Standard 50 10 12 800 Overhead allocation rate per unit Deluxe Bombay dyeing produces various cotton-based products and one of the products lines is bed sheets. The company produces three categories of bed sheets based on the market segments: Regular, Standard, and Deluxe. Its cost accounting system applied conversion costs using a plant-wide application rate using sum of material and labour cost as the cost driver. The company is thinking of employing an ABC system for conversion costs. Company concluded that its plant had six activities and costs budgeted for the upcoming year are as follows: Activity Area Material and Coloring Cost Block and Design Procurement Cost Machine Setups Cost Depreciation & Maintenance Cost Labour Cost Packaging & Shipping Cost Other Cost Total Particulars Fabric (meters) Cost per Meter of material and colouring Material handling and coloring cost include the cost of the raw material procured and after procurement the company color the white material into different colors as per the requirements, Cost details for three categories are as follows: Particulars Units to be produced Machine hours (per unit) No. of Blocks and Design Procured. No. of machine set ups Regular 2.5 Rs. 60 After coloring the company put the colored sheet for printing purposes. Sheets are printed in different designs therefore the company has to procure deferent blocks and design to printed specific sheets. Sheets of the same designs are printed in batches and to produce a batch first they have to set up a machine as per the given design and thereafter printing of sheets happens. Printed sheets are then washed hard to fasten the colors and ironed thereafter. The cost of washing and ironing is included in the other costs. Finally, as per the orders, sheets are packed and shipped. Irrespective of the no. of sheets, packaging and shipping cost per order remain the same. The cost of different bedsheet using ABC. Activity Material and Coloring Cost Block and Design Procurement Cost Machine Setups Cost Depreciation & Maintenance Cost Company follows standard costing method for pricing purpose and for this month company summarizes following information regarding projections of the activities performed for all three categories: Labour Cost Packaging & Shipping Cost Other Cost Total Units Per unit cost Regular 10,000 3 100 75 Budgeted Costs 235,12,000 1,14,000 1,60,000 z 35,10,000 210,92,000 1,90,000 250,00,000 135,78,000. 2 1,000 Cost Driver Standard 3 Rs. 100 Regular Standard 5.000 5 50 Labor Hours per unit. Orders shipped You are required to fill in the boxes under Question 4. Refer attached Answer sheet.. Following tables assists you to fill the boxes for Q4. Activity Area Block and Design Procurement Cost Machine Setups Cost Depreciation & Maintenance Cost Labour Cost Packaging & Shipping Cost Other Cost Deluxe 3,2 Rs. 200 25 5 2,000 Deluxe 800 7 Standard 50 10 12 800 Overhead allocation rate per unit Deluxe

Answer rating: 100% (QA)

To calculate the cost of different bed sheets using ABC ActivityBased Costing we need to allocate the overhead costs to each product based on the cost ... View the full answer