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EXAMPLE 2 A firm produces 4 products A, B, C & D. Data for the last period are as follows. PRODUCT OUTPUT (UNITS) NUMBER
EXAMPLE 2 A firm produces 4 products A, B, C & D. Data for the last period are as follows. PRODUCT OUTPUT (UNITS) NUMBER OF DIRECT PRODUCTION LABOUR RUN IN A HOURS MACHINE HOURS PER UNIT MATERIAL COST PER UNIT MATERIAL COMPONENTS PER UNIT PERIOD PER UNIT ABCD 25 3 2 2 $30 8 25 4 4 4 $75 5 250 7 2 2 $30 8 250 10 4 4 $75 6 Direct labour costs $7 per unit Overhead costs were as follows; Short run variable costs $8,250 Long run variable costs Scheduling costs $7,680 Set up costs $3,600 Material handling costs $7,650 Required; Find the unit production cost a) Use conventional product costing using a machine hour overhead absorption rate b) Using ABC with the following cost drivers; Short term variable cost Scheduling cost Set up costs Material handling costs Cost driver Machine hours Number of production runs Number of production runs Number of components
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