BKAM2013 MANAGEMENT ACCOUNTING 1 (All the information are stated in the questions below)

QUESTION 1 (Topic 7: Activity-Based Costing)

Exercise 1

IG Company has established the following cost pools for 2014:

COST POOLS COSTS COST DRIVERS LEVEL Maintenance RM20,000 Machine hours 10,000 Materials handling RM25,000 Number of moves 250 Machine setup RM30,000 Setup hours 1,000 Inspection RM25,000 Number of inspections 500 Total RM100,000ITEM IG101 IG102 Direct material costs RM10,000 RM7,500 Direct labor costs RM8,000 RM5,500 Number of units 2,000 1,500 Direct labor hours 640 400 Machine hours 700 650 Number of materials moves 40 15 Number of setup hours 80 40 Number of inspections 35 15COST POOLS NORMAL COSTS Electric power RM40,000 Materials handling RM90,000 Setups RM80,000 Quality inspections RM40,000 Total RM250,000ACTIVITIES COST DRIVERS AVAILABLE CAPACITY COSTS Electric power Kilowatt hours 20,000 kwh RM40,000 Materials handling Material moves 5,000 moves RM90,000 Setups Machine setups 1,000 setups RM80,000 Quality inspections No. of inspections 2,000 inspections RM40,000ITEM AMOUNT Direct material costs RM20,000 Direct labor costs RM18,000 Machine hours 1,800 Direct labor hours 2,000 Kilowatt hours of electricity 2,000 Number of materials moves 40 Number of machine setups 5 Number of quality inspections 20