Hashtag Company (Co.) is in the business of producing gadgets. Co. presently producing three products X, Y and Z. Hashtag Co. presently applying traditional costing approach in order to allocate and apportion indirect costs (overheads) among all three products. However, Hashtag looking for more better approach to apportioning the indirect costs among products. The approach that can determine the cost of each products more accurately. The approach that can help the company to identify overpriced and underpriced products. The approach that can help to eliminate the unprofitable products. Therefore, company decides to switch on to activity based costing (ABC) approach since it apportion and allocation of indirect costs is on the basis of identifying and establishing cost centers, activities and cost drivers. The company assigns this job to you to compare the results of traditional costing approach with ABC system to make final decision to adopt the ABC system. The following data available for comparison: -

	X	Y	Z
Production (Units)	20000	18000	24000
Raw Material per unit (RO)	1.2	0.8	1.4
Direct Labour per unit (RO)	1.35	1.15	1.45
Labour hours consumed	3000	3200	4800
Machine hours consumed	2500	2200	3300
Number of Times Machine set-up	200	180	320
Number of Purchase order	20	22	28
Number of Deliveries to retailer	12	10	28

The total overhead costs to all the product together is as below: -

	Amount in RO
Machine Set up costs	32810
Machine Running costs	28400
Delivery costs	4800
Procurement costs	5600

Answer the following multiple choice questions based on abovementioned case and activity based costing (ABC) concept: -

43)

How much total overhead is assigned to Product Y using traditional costing approach?

A.

RO 31248

B.

RO 19530

C.

RO 20832

D.

RO 71610

44)

The activity rate for delivery cost under ABC approach would be: -

A.

RO 46.87

B.

RO 96

C.

RO 3.55

D.

RO 80

45)

The activity rate for machine running cost under ABC approach would be: -

A.

RO 46.87

B.

RO 80

C.

RO 3.55

D.

RO 96

46)

The predetermined overhead rate as per the traditional costing approach is: -

A.

RO 1.16

B.

RO 6.51

C.

RO 8.95

D.

RO 7.00

47)

What is total cost per unit for Product Y using ABC approach?

a.

RO 3.11

b.

RO 3.00

c.

RO 3.60

d.

RO 4.17

48)

The machine running cost assigned to Product X under ABC is: -

A.

RO 7810

B.

RO 11715

C.

RO 8875

D.

RO 1152

49)

What is total cost per unit for Product Z using ABC approach?

A.

RO 4.15

B.

RO 4.17

C.

RO 3.00

D.

RO 3.60

50)

The machine running cost assigned to Product Y under ABC is: -

A.

RO 11715

B.

RO 960

C.

RO 7810

D.

RO 8875