Question
Comarch plc manufactures product A and B. The following information is available form the company: Product A Product B Units produced 10000 20000 Selling price
Comarch plc manufactures product A and B.
The following information is available form the company:
Product A | Product B | |
Units produced | 10000 | 20000 |
Selling price ($) | 450 | 210 |
Direct materials and labour per unit ($) | 250 | 90 |
Direct labour hours | 30000 | 78000 |
Direct labour hours per unit | 3 | 3,9 |
The company has a total budgeted overhead of $2,5 million.
The following overhead costs details are also available:
Activity | Budgeted cost |
in $ | |
Set ups | 400000 |
Machine running | 1800000 |
Engineering | 120000 |
Shiping | 180000 |
Total | 2500000 |
The company collect data about cost drivers:
Cost driver | Product A | Product B | |
Engineering hours | 5000 | 7500 | |
Number of set ups | 200 | 100 | |
Machine hours | 52000 | 110000 | |
Number of shipments | 5000 | 10000 |
REQUIRED 1) You are required to allocate overheads using ABC costing (7 marks) 2) You are required to prepare profitability report for ABC (5 marks) 3) Recommend solution to improve cost management (3 mark)
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