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Part (A) Rand Ltd produces candy sticks (hooked and straight). Both products pass through two producing departments. The hooked sticks's production is much more labour-intensive
Part (A) Rand Ltd produces candy sticks (hooked and straight). Both products pass through two producing departments. The hooked sticks's production is much more labour-intensive than the straight sticks. The straight stick is also more popular. The following data have been gathered for the two products: Product Data Units produced per year Machine hours Packing orders Hooked 200,000 10,000 30,000 Straight 2,000,000 40,000 30,000 Rand has decided to use activity-based costing and has developed two types of activities, machine-related (based on machine hours), and other overhead (based on packing orders). Machine-related costs equal $160,000. Other overhead costs equal $240,000. Required: (a) Calculate the activity rate for machine-related costs based on machine hours. (b) Calculate the activity rate for other overhead costs based on packing orders. (c) Using the two activity rates, calculate the overhead cost per unit for hooked sticks. (d) Using the two activity rates, calculate the overhead cost per unit for straight sticks
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