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ANSWER USE MS.EXCEL! Fajar Plantation Pty, Ltd continued to grow during 2022. The manager decided to add detergents to its existing range of soap and
ANSWER USE MS.EXCEL!
Fajar Plantation Pty, Ltd continued to grow during 2022. The manager decided to add detergents to its existing range of soap and candles. Ms. Zahra, expressed concern regarding the accuracy of the product costing system now that the diversity of output has increased. To further understand the costs. Ms. Zahra undertook an activity analysis of indirect costs. Her findings were as follows. Activity Receipt of material Machining Deliveries Machine set-ups Engineering Packaging Cost $ 22,500 127,500 22,500 45,000 15,000 37,500 Material receipt Machine hours Number of deliveries Machine set-ups Engineering advice slips Cartons packed Cost driver Material receipts Machine hours Number of deliveries Machine set-ups The products' use of each cost driver was estimated to be as follows. Soaps Candles Detergents 200 30,000 100 400 700 100,000 1,100 1,500 50 2,600 Engineering advice slips Cartons packed 100 70,000 300 1,100 20 900 30 500 Required: a. What do you know about activity cost and why a company should consider using activity-based costing to determine the rates for each of its activity cost? b. Compute the activity cost rate for each activity? Please give your explanation! c. What are the important considerations so that a cost can be classified into direct product costs and indirect product costs? Please explain! d. Calculate the indirect product cost based on the activity analysis? Please give your explanation! e. Calculate the total cost of production for detergent and explain the resultStep by Step Solution
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