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MediK Manufacturing is a medical apparatus manufacturer. The production process involved two departments, i.e. Moulding Department and Finishing Department. Estimated indirect manufacturing costs to incur
MediK Manufacturing is a medical apparatus manufacturer. The production process involved two departments, i.e. Moulding Department and Finishing Department. Estimated indirect manufacturing costs to incur in 2022 as follow: Molding Department Finishing Department RM300,000 200,000 RM500,000Total manufacturing overhead Total direct labour hours for 2022 10,000 The costs analysis based on activities identified the following overhead costs involved for supporting those activities: Setup (500) Engineering (5,000 hours) Material movement (6,000 hours) Quality control inspection (1,000 inspection) Machine operation (5,000 hours) RM100,000 125,000 75,000 85,000 115,000 Total activity costs RM500,000 One of the products produced by MediK is a patented medical thong. The thong is produced in a batch of 200 units. Each batch involved material costs of RM3,000 incurred in the Molding Department and required to go through a process of 25 machine hours in that department. The manufacturing process in the Molding Department is approximately 80% automation while Finishing Department is 100% depend on direct labour. In Finished Department, each batch incurred RM1,000 direct labour costs and went through a process of 40 hours direct labour. The company set that each batch of processing the thong required 5 setups, 15 engineering hours, 50 material movement and 25 inspections. Required: a) Calculate the cost per unit thong assuming manufacturing overhead costs allocated to the product using the following rates: i. Single plant wide rate based on machine hour ii. Departmental rate based on machine hour for Molding Department and direct labour for Finishing Department. iii. Activity based rate
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