Pictora Ltd. produces carbon coated customised plates used in film development. The plates are produced on a
Question:
Pictora Ltd. produces carbon coated customised plates used in film development. The plates are produced on a job order basis. The company has five overhead cost pools - machine setups, material handling, milling and assembly, hazardous waste controls and quality control.
The chief accountant wants to compare overhead costs allocated under the conventional system, where total overhead costs are allocated based on machine hours, with a newly designed Activity Based Costing system.
The chief accountant for Pictora Ltd has estimated the following activity cost pools and activity drivers for the year:
The production requirement for job number ZE-32 is presented below:
Required:
1) Compute the total manufacturing cost per unit for job ZE-32 under the conventional costing system?
2) Under the new ABC system, calculate the total manufacturing cost per unit for job ZE-32?
3) For job ZE-32, why the cost per unit under the conventional costing system is different from cost per unit under the ABC system?
Management Accounting
ISBN: 9781760421144
7th Edition
Authors: Kim Langfield Smith, Helen Thorne, David Alan Smith, Ronald W. Hilton