1. (a) XYZ Ltd. Produces three products A, B and C for which the standard costs...

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1. (a) XYZ Ltd. Produces three products A, B and C for which the standard costs and quantities per unit are as follows: (5 Marks) Particulars A B C Output (Units) 10000 20000 30000 Direct material cost per unit Rs60 Rs 40 Rs 20 Direct Labour cost per unit (@Rs 40) Rs 40 Rs 80 Rs 120 Machine hours per unit 3 2 1 Number of purchase requisitions 1000 200 300 Number of machine set-ups 150 100 509 Production overhead = P Rs 1400000 Q Rs 2200000 Department P is labour intensive, and Q is machine intensive. Total labour hours in Dept. P = 140000 and Total machine hours in Dept. Q = 100000 Production overhead by activity Receiving and Inspection Rs 1200000 Production scheduling/ set up= Rs 2400000 Prepare statement of cost per unit under traditional absorption method and activity-based costing approaches. Also compare the result of the two methods and give your comments. (b) Why is ABC (activity-based costing) model considered to be superior to the traditional method of costing? (3 Marks) 1. (a) XYZ Ltd. Produces three products A, B and C for which the standard costs and quantities per unit are as follows: (5 Marks) Particulars A B C Output (Units) 10000 20000 30000 Direct material cost per unit Rs60 Rs 40 Rs 20 Direct Labour cost per unit (@Rs 40) Rs 40 Rs 80 Rs 120 Machine hours per unit 3 2 1 Number of purchase requisitions 1000 200 300 Number of machine set-ups 150 100 509 Production overhead = P Rs 1400000 Q Rs 2200000 Department P is labour intensive, and Q is machine intensive. Total labour hours in Dept. P = 140000 and Total machine hours in Dept. Q = 100000 Production overhead by activity Receiving and Inspection Rs 1200000 Production scheduling/ set up= Rs 2400000 Prepare statement of cost per unit under traditional absorption method and activity-based costing approaches. Also compare the result of the two methods and give your comments. (b) Why is ABC (activity-based costing) model considered to be superior to the traditional method of costing? (3 Marks)