Question
ClearVision 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
ClearVision 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: Salaries Supplies Factory expenses Factory Costs (RM) 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 cest 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: Activities Activity Driver Set up Assembly Batch Inspect and Finishing Unit Finishing Packaging Packing Hours 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 Required: a) Determine the amount of cost pool for each of the four activities b) Determine the activity-driver rates for assigning factory costs to the two product. (5 marks) (4 marks) Page 2 of 4
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