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Clear Vision Bhd (CVB) manufactures protective eyewear for use in commercial and home applications. The firm has two main product lines-the high-quality product is
Clear Vision Bhd (CVB) manufactures protective eyewear for use in commercial and home applications. The firm has two main product lines-the high-quality product is known as Jelas(JL), and the low-cost, value-version is known as Cerah (CH). Information on the factory conversion costs for CVB is as follows: Factory Costs (RM) Salaries Supplies Factory expenses 1,275,000 225,000 825,000 2,325,000 CVB uses ABC to compute the cost per unit of its product. Below is the resource consumption cost drivers based on rough estimates of the amount of each activity consumed. Set up Assembly Inspection & Packaging Finishing Total Salaries 15% 55% 20% 10% 100% Supplies 20% 60% 20% 100% Factory 80% 20% 100% The activity cost drivers for the two products are summarized below: Activity Driver Batch Unit Activities Set up Assembly I Inspect and Finishing Packaging Packing Hours Finishing CH JL Batches 250 600 Units 60,000 72,000 Finishing hours per unit 0.2 0.3 Packaging hours per unit 0.1 0.15 Materials cost per unit RM3.80 RM6.00
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