Kumar & Sons Limited makes three products, using broadly the same production methods and equipment for each. A conventional (Traditional) product costing system is used at present, where manufacturing overhead is allocated using machine hour, a volume based driver.

Details of the three products for a typical period are:

Details of the three products for a typical period are: Hours per unit Materials per Volumes Labour Machine unit (units) Hours Hours $ Product X 0.5 1 16 600 Product Y 1.5 10 1,300 Product Z 2 20 7,000