Buoys and Gulls Ltd manufactures sailing equipment. The company makes three products (A, B and C). The following information is available for the year.

The following table shows the predetermined overheads for each activity cost pool and the associated cost drivers. It also shows the predetermined cost driver rate, which is calculated by dividing the overhead by the predetermined cost driver volume.

As you can see, the business anticipates the annual production overheads will be £1,450,000. You need to remember that this is in addition to the direct costs (direct materials, direct labour and direct expenses). Using the information provided, calculate

(a) the production cost per unit for each product and

(b) the total production cost for each product and the total production cost for the period.

Transcribed Image Text:

Product A Product B Product C Total Direct material 95,000 120,000 785,000 1,000,000 Direct labour 116,000 145,000 239,000 500,000 Numbers of purchase orders 3,000 8,000 89,000 100,000 Number of machine set-ups 12 18 270 300 Number of quality inspection hours 350 180 4,470 5,000 Number of machine hours 6,000 5,500 88,500 100,000 Number of units produced 1,000 2,000 17,000 20,000