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Azion Manufacturing is a company that produces two types of cleaning detergents, Sunny Clear and Rosy Nice. Previously, Azion Manufacturing used single rate/ traditional costing

Azion Manufacturing is a company that produces two types of cleaning detergents, Sunny Clear and Rosy Nice. Previously, Azion Manufacturing used single rate/ traditional costing system in computing its product overhead costs. Mr. Yeong, the newly appointed Chief Finance Manager decides to implement the Activity- Based Costing (ABC) system starting this year in computing the product costs. Below is the information gathered relates to the cost production of 40,000 units of Sunny Clear Detergent and 50,000 units of Rosy Nice Detergent:

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Sunny Clear Rosy Nice Direct material cost RM15 per unit RM10 per unit Direct labour hour 1 hour per unit 1 hour per unit Wages rate RM10 per hour RM10 per hourActivity Cost Cost Drivers Estimated Expected Usage Pools Overhead Sunny Clear Rosy Nice (RM) Machine setups No. of setups 300,000 1,000 2,000 Mixtures No. of mixtures 180,000 600 900 Inspections No. of inspections 240.000 10,000 15,000

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