Question
1. The following table lists out the overhead cost: Activity cost pool Overhead cost () Additional Notes Job-order set up 33,000 Procurement and placement 360,000
1. The following table lists out the overhead cost:
Activity cost pool | Overhead cost () | Additional Notes |
Job-order set up | 33,000 |
|
Procurement and placement | 360,000 |
|
Installation of winding system | 195,000 | An auto winding system is fitted with every watch |
Quality inspection (machine) | 60,000 |
|
Quality inspection (manual) | 21,000 |
|
Finishing | 140,000 | Hand-made finishing |
Packaging and delivery | 44,250 | The company packages and delivers watches in batches containing 10 watches per batch. On an average, the packaging and delivery cost is the same for all batches (10 watches= 1 batch) |
Factory cleaning services | 30,000 | A cost that is not consumed by any of the products |
2. The company pays 8 per direct labour hour
3. The following table lists out some key figures for this firm:
Description | Quantity |
Number of watches | 1,500 units |
Direct labour hours | 7,000 hours |
Machine hours | 14,000 hours |
Number of job orders | 110 |
Inspection hours using machine | 800 hours |
Number of cycles for procurement and placement | 2,400 times |
i) What would be the sales price of the following two products using the ABC system if the company adds 30% mark up on total allocated costs?
Model | Luxury | Sports |
Category | Female | Male |
Job order number | LF-340 & LF-341 | SM-119 & SM-120 |
Number of units | 30 | 50 |
Direct materials ( per unit) | 85 | 55 |
Direct labour hours | 200 | 250 |
Machine hours | 225 | 750 |
Inspection hours using machine | 12 | 40 |
Number of cycles for procurement and placement | 50 | 80 |
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