Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Analyse and explain the differences in the product costs and target prices for each product line between the two alternative costing systems. Discuss likely reasons
- Analyse and explain the differences in the product costs and target prices for each product line between the two alternative costing systems. Discuss likely reasons for the identified differences.
Traditional costing system
|
| Standard model | Deluxe model | Heavy duty model |
| Raw material | 27.50 | 47.75 | 73.00 |
| Direct labour | 20.00 | 35.00 | 35.00 |
| Manufacturing overhead | 240.00 | 350.00 | 350.00 |
| Per unit cost | 287.5 | 432.75 | 458 |
| Targeted price | 603.75 | 908.775 | 961.8 |
Activity based Costing
| Activities | Standard model | Direct model | Heavy-duty model |
| Direct materials | 27.5 | 47.75 | 73 |
| Direct labour | 20 | 35 | 35 |
| overhead | 62.37 | 419.97 | 142.29 |
| Total cost per unit | 109.87 | 502.72 | 250.29 |
| Target price | 230.73 | 1055.712 | 525.60 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started