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... Activity Based Costing 5.21 Department Pis labour intensive and is machine intensive Total labour hours in Dept. P = 1,40:00: Total machine hours in Dept. = 1,00.000 Production overheads by activity Receiving and inspection Rs. 12.00.000 Production scheduling/set up Rs. 24,00,000 Required: Prepare Statement of Cost per unit under traditional absorption costing and activity based costing approaches. Also compare the result of the two methods and give your comments Ans: Traditional Absorption Costing: Overhead Absorption Rate: Dept. P, Rs. 10 per hour, Depr. Q. Rs. 22 per hour, Total Cost X Rs. 176. Y Rs. 184, Z Rs. 192. ARC: Cost Driver Rates: Rs. 800 per batch, Rs 8000 per set up. Total Cost: X Rs 300, Y Rs. 168, Z Rs. 161.33] 4/RTP 15 Led, produces three products P. . and R for which the standard costs and quantities per unit are as follows: 100 80 260 Particulars Q Quantity produced 10,000 20,000 30,000 Direct material cost per unit (Rs.) 60 Direct labour cost per unit @ Rs. 20 per hour (Rs.) 80 100 Machine hours. per unit No. of purchase requisitions 1,200 1,800 2,000 240 No. of setups 300 Production overliead split by departments - Department 1 = Rs. 22,00,000 - Department II = Rs. 30,00,000 Department is abour intensive and Department. It is machine intensive Total labour hours in Department I = 1,83,333 Total machine hours in Department II = 5,00,000 Production overhead split by activity - Receiving/inspecting Rs. 28,00.000 - Production scheduling/machine set-up Rs. 24,00.000 Number of batches received/inspected = 5,000 Number of batches for scheduling and set-up 800 You are required to: (i) Prepare Product Cosy Statement under traditional absorption costing and activity-based costing method. D) Compare the result under iwo methods. Ans: Traditional costing-Dept. I Rs. 12 per hour. Dept. Il Rs. 6 per hour, Cost per unit P Rs. 220, Rs. 232, RRs. 262. Activity based costing-Receiving & Inspection cost Rs. 67.20 per purchase acquisition, Set up cost Rs. 3,000 per set up. Cost per unit: P Rs. 300: Rs. 250, R Rs. 2287 PCT Ltd. produces three products.XY and Z for which the standard costs and quantities per unit are as follows: 10.000 Rs. 60 Rs. 40 Output (units) Direct material cost per unit Direct labour wages per unit (@ Rs. 40) Machine hours per unit No. of purchase requisitions No. of machine set-ups Production overheads: Department P-Rs. 14,00.000 Q-Rs. 22.00.000 Products Y 20,000 Rs. 40 Rs. 80 2 200 100 Z 30,000 Rs. 20 Rs. 120 1 3000 1000 150 ... Activity Based Costing 5.21 Department Pis labour intensive and is machine intensive Total labour hours in Dept. P = 1,40:00: Total machine hours in Dept. = 1,00.000 Production overheads by activity Receiving and inspection Rs. 12.00.000 Production scheduling/set up Rs. 24,00,000 Required: Prepare Statement of Cost per unit under traditional absorption costing and activity based costing approaches. Also compare the result of the two methods and give your comments Ans: Traditional Absorption Costing: Overhead Absorption Rate: Dept. P, Rs. 10 per hour, Depr. Q. Rs. 22 per hour, Total Cost X Rs. 176. Y Rs. 184, Z Rs. 192. ARC: Cost Driver Rates: Rs. 800 per batch, Rs 8000 per set up. Total Cost: X Rs 300, Y Rs. 168, Z Rs. 161.33] 4/RTP 15 Led, produces three products P. . and R for which the standard costs and quantities per unit are as follows: 100 80 260 Particulars Q Quantity produced 10,000 20,000 30,000 Direct material cost per unit (Rs.) 60 Direct labour cost per unit @ Rs. 20 per hour (Rs.) 80 100 Machine hours. per unit No. of purchase requisitions 1,200 1,800 2,000 240 No. of setups 300 Production overliead split by departments - Department 1 = Rs. 22,00,000 - Department II = Rs. 30,00,000 Department is abour intensive and Department. It is machine intensive Total labour hours in Department I = 1,83,333 Total machine hours in Department II = 5,00,000 Production overhead split by activity - Receiving/inspecting Rs. 28,00.000 - Production scheduling/machine set-up Rs. 24,00.000 Number of batches received/inspected = 5,000 Number of batches for scheduling and set-up 800 You are required to: (i) Prepare Product Cosy Statement under traditional absorption costing and activity-based costing method. D) Compare the result under iwo methods. Ans: Traditional costing-Dept. I Rs. 12 per hour. Dept. Il Rs. 6 per hour, Cost per unit P Rs. 220, Rs. 232, RRs. 262. Activity based costing-Receiving & Inspection cost Rs. 67.20 per purchase acquisition, Set up cost Rs. 3,000 per set up. Cost per unit: P Rs. 300: Rs. 250, R Rs. 2287 PCT Ltd. produces three products.XY and Z for which the standard costs and quantities per unit are as follows: 10.000 Rs. 60 Rs. 40 Output (units) Direct material cost per unit Direct labour wages per unit (@ Rs. 40) Machine hours per unit No. of purchase requisitions No. of machine set-ups Production overheads: Department P-Rs. 14,00.000 Q-Rs. 22.00.000 Products Y 20,000 Rs. 40 Rs. 80 2 200 100 Z 30,000 Rs. 20 Rs. 120 1 3000 1000 150