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both same questions rules ltd. manifactures two products, Nip and Tuk and both are produced from the same material and labour. They currently ute machute
both same questions
rules ltd. manifactures two products, Nip and Tuk and both are produced from the same material and labour. They currently ute machute The company is now considering implementing an activity based costing system. The management accountant has supplied the following information for the two products for the last year Nip Tuk Data per unit Sales price 40 55 Direct material cost 12 Direct labour cost 10 Direct material usage (g) 4.0 6.0 Direct labour hours 1.2 1.3 Machine hours 1.5 2.4 Activities per annum Number of production set ups 22 32 Number of purchase orders 195 85 Number of inspections 60 40 20 25 Number of designs PASEBNI Production and sales volumes (units) 45,000 75.000 The annual production overheads stere as follows: The annual production overheads were as follows: Machine set up costs 270,000 Design costs 135.000 Machine maintenance costs 195.000 Ordering costs 140,000 Quality control 126.250 Total overhead cost 866,250 You are required to: a Calculate the full cost and profit per unit for products Nip and Tuk using Cumulus Itd's current method of absorbing production a overbeads. b. Calculate the full cost and profit per unit for each product using activity based costing c. Advise Cumulus itd of five benefits that arise as a result of the implementation of an activity based costing systemStep by Step Solution
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