Sriram Ltd. manufactures four products A, B, C and D. Output and cost data for January...

 

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Sriram Ltd. manufactures four products A, B, C and D. Output and cost data for January 2010 are as follows: Product Output units A B C D 20 20 200 200 Number of Material cost Direct labor per units per unit (Rs) production runs in the period 2 Expediting and scheduling costs Material handling costs 2 5 5 14 10 50 20 80 1 3 Required Calculate product costs using the followings approaches: a. Traditional/Absorption costing 1 Direct labor cost per hour is Rs.10. Overhead costs are as follows: Short-run variable cost Rs 10,560 Set-up costs Rs 1,000 Rs.10,080 3 Rs. 7,840 Rs 42,480 Machine hours per unit 1 3 1 3 b. ABC c. Compare and comment on product costs determined under the two approaches. Sriram Ltd. manufactures four products A, B, C and D. Output and cost data for January 2010 are as follows: Product Output units A B C D 20 20 200 200 Number of Material cost Direct labor per units per unit (Rs) production runs in the period 2 Expediting and scheduling costs Material handling costs 2 5 5 14 10 50 20 80 1 3 Required Calculate product costs using the followings approaches: a. Traditional/Absorption costing 1 Direct labor cost per hour is Rs.10. Overhead costs are as follows: Short-run variable cost Rs 10,560 Set-up costs Rs 1,000 Rs.10,080 3 Rs. 7,840 Rs 42,480 Machine hours per unit 1 3 1 3 b. ABC c. Compare and comment on product costs determined under the two approaches.

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To calculate product costs using both traditional absorption costing and activitybased costing ABC we need to allocate the overhead costs to each prod... View the full answer