3.1

	Product A	Product B
Manufacturing costs per unit
X Number of units
Total manufacturing costs

(4 marks)

3.2

Activities	Activity costs (R)	Cost driver volumes	Activity rates
Machine department costs
Set-up costs
Stores receiving
Inspection/Quality control
Materials handling and dispatch

REQUIRED Use the information provided below to calculate the following: 3.1 The manufacturing costs per unit and the total manufacturing costs, if all the overheads costs are absorbed on a machine hour basis. ( 4 marks) 3.2 The overheads cost per unit using the ABC system. (16 marks) INFORMATION Visa Limited manufactures two products and the company is keen on applying the principles of activity-based costing (ABC). Relevant information pertaining to the two products for a given period appear below: The two products are similar and are usually produced in production runs of 20 units and sold in batches of 10 . Currently the production overheads are absorbed by using a machine hour rate, and the total of the production overheads for the period are as follows: The cost drivers (in random order) to be used for the overhead costs are as follows: The number of requisitions raised on the stores was 120 for each product and the number of orders executed was 126 , each order being for a batch of 10 of a product. REQUIRED Use the information provided below to calculate the following: 3.1 The manufacturing costs per unit and the total manufacturing costs, if all the overheads costs are absorbed on a machine hour basis. ( 4 marks) 3.2 The overheads cost per unit using the ABC system. (16 marks) INFORMATION Visa Limited manufactures two products and the company is keen on applying the principles of activity-based costing (ABC). Relevant information pertaining to the two products for a given period appear below: The two products are similar and are usually produced in production runs of 20 units and sold in batches of 10 . Currently the production overheads are absorbed by using a machine hour rate, and the total of the production overheads for the period are as follows: The cost drivers (in random order) to be used for the overhead costs are as follows: The number of requisitions raised on the stores was 120 for each product and the number of orders executed was 126 , each order being for a batch of 10 of a product