Question
Hen has a single production process, for which the following costs have been estimated for the period ending 31stDecember Year 7:GHC Material receipt and inspection
Hen has a single production process, for which the following costs have been estimated for the period ending 31stDecember Year 7:GHC Material receipt and inspection costs 31,200Power Costs 39,000Material Handling costs 27,300Henmakes three products-X, Y and Z. These products are made by the same group of employees, using power drills. The employees are paid GHC 8 per hour.The following budgeted information has been obtained for the period ending 31stDecember Year 7:Product X Product Y Product Z Production quantity (units) 2,0001,500 800Quantity/Batch 20030053.3333For each unit of product Direct material (meters)562.5Direct material cost (GHC)436Direct labour (minutes)244060Number of power drill operations (per unit)845Overhead costs are currently absorbed into the cost of production units using an absorption rate per direct labour hour. A factory-wide absorption rate is used for work in all the production departments.An activity-based costing investigation has revealed that the cost drivers for the overhead costs are as follows:Material receipt and inspection: number of batches of materialPower: number of power drill operations
Material handling: quantity of material (metres) handled.Required:Using the activity-based costing approach, calculate the production cost per unit for product X, product Y and product Z
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