ACC308 & ACC4243 Topic 1 - ABC - BLQ2 $4 $15 $2 $22 40 5122 5102 1 2002 210450 75 0.25 DAY Ltd manufactures four products - A, B, C and D using the same technology in machine and processes. The following data relates to a production month: B D Volume (units) 300 4,000 400 5,000 Material cost/unit $4 SIS Labour cost/unit 15 . Direct labour hour/unit 150 0.5 LO000.5 75001.5 Machine hour/unit 1000 0.25 400 1.0 75001.5 29 5 The total production overhead costs for the month were analyzed as follows: Machine related factory overhead costs - 512,600 Set-up costs are - 9,450 Cost of placing material orders - S1,200 Material handling costs - 56,000 Administration for spare parts - $3,060 These overhead costs are absorbed by products on a machine hour rate of $3.60 per hour, giving an overhead cost per product of A-50.90 B = $0.90 C-53.60 D=$5.40 However, investigation into the activities related to the production overhead for the month showed the following figures No ofset-ups f 6 15 No. of material orders 2 3 2 3 10 No. of material handling 2 8 10 24 No. of spare parts 34 Required: a) Compute an overhead cost per product using the ABC techniques, tracing overheads to production units by means of cost drivers. b) Comment briefly on the differences disclosed between overhcads traced by the present system and those traced by ABC. CS Scanned with CamScanner D 2 4