Kelisa Bhd produces commercial cleaning products for household since 2012. The company has been adopting the traditional way in allocating its overhead costs to the products using blanket rate based on machine hours. To remain competitive in the market, the management of Kelisa Bhd would like to use activity-based costing to allocate overhead costs in the future rather than the use of traditional costing method.

The following is the manufacturing overhead costs estimates for a year:

Activity Activity Cost Driver Activity Cost (RM) Purchasing of material No. of material purchase orders 295,500 Move material to mixing No. of moves 82,000 Mixing material No. of mixing hours 240,000 Bottling and packaging No. of machine hours 457,500 Quality inspection No. of inspections 125,000 Total 1,200,000Activity Cost Driver Volume No. of material purchase orders 23,640 No. of moves 32,800 No. of mixing hours 30,000 No. of machine hours 50,000 No of quality inspection 25,000No. of material purchase orders 10 orders No. of moves to mixing 20 moves No. of chemical mixing hours 6 mixing hours No. of bottling and packaging hours 8 machine hours No. of inspections 10 inspections