Question
A company manufacturing 2 products furnishes the following data for a year: Product Annual output (Units) Total machine hours Total number of purchase orders Total
A company manufacturing 2 products furnishes the following data for a year:
| Product | Annual output (Units) | Total machine hours | Total number of purchase orders | Total number of machine set-ups |
| A | 5,000 | 20,000 | 160 | 20 |
| B | 60,000 | 120,000 | 384 | 44 |
The annual overheads are:
| Volume Related Activity Costs | 550,000 |
| Setup Related Costs | 820,000 |
| Purchase Related Costs | 618,000 |
You are required to calculate the cost per unit of each product A and B based on:
-
Traditional method of charging overheads (Absorption Costing) (4 Marks)
-
Activity based costing method (6 Marks)
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Hong Kong Auditing Economic Theory And Practice
Authors: Ferdinand A Gul
2nd Edition
9629371413, 978-9629371418
