Question
Pakistan clicks ltd has been struggling with their product cost. The management has hired a cost manager who has suggested to move from traditional costing
Pakistan clicks ltd has been struggling with their product cost. The management has hired a cost manager who has suggested to move from traditional costing to modern costing and thus, compiling the following data to be used in activity-based costing.
Activity | Budgeted overhead cost |
Activity driver |
Budgeted level for activity driver |
Cost per unit of activity driver |
Machine setups | 300000 | Not of setups | 100 | 3000 per setup |
Material handling | 150000 | Weight of raw material | 5000 kilograms | 3 per kilogram |
Hazardous waste control | 75000 | Weight of hazardous chemical used | 10000 kilograms | 7.5 per kilogram |
Quality control | 112500 | No of inspections | 1000 | 112.5 per inspection |
Other overhead costs | 300000 | Machine hours | 20000 | 15 per machine hour |
Total | 937500 |
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Calculate the unit cost of a production order for 100 specially coated plates used in film development. In addition, direct material cost PKR 180 per plate and direct labor costing PKR 60 per plate, the order requires the following. An order of 1000 boxes of film development chemicals has the following production requirements:
Machine setups | 9 setups |
Raw Material | 100000 kilograms |
hazardous chemical | 2000 kilograms |
Inspections | 10 inspections |
Machine hours | 500 machine hours |
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