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QUEST PARTA Department X is a division in Bestie Erat and applying activity-based costing. Estimated departmental costs per year are RM1,031,500. The majority effort of
QUEST PARTA Department X is a division in Bestie Erat and applying activity-based costing. Estimated departmental costs per year are RM1,031,500. The majority effort of activity for this department is finding the best supplier which most of the overhead costs are allocated in this activity. All purchase orders are received in a single shipment. Overhead costs Activity Cost driver Quantity (RM) Find best suppliers Number of telephone calls 475,000 475,250 Issue purchase orders Number of purchase orders 56,875 287,500 Review receiving reports Number of receiving reports 38.125 268,750 One special order product manufactured by the company required the following Department X activities: Direct materials 1 kilogram at RM2.25 per gram Direct labour 5 hours at RM65 per hour Telephone calls 230 Purchase orders 60 Receipts 25 Required: a) Compute the amount of Department X cost should be assigned to this product. (9 marks) b) If 100 unit of the products are manufactured during the year, compute the Department X cost per unit. (1 mark) c) If Department X costs had been allocated using telephone calls as the allocation base, how much cost would have been assigned to this product
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