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QUESTION 1 ANSWER ALL PARTS OF THIS QUESTION FNBW Limited manufactures two products (X and Y). The overhead costs have been divided into four
QUESTION 1 ANSWER ALL PARTS OF THIS QUESTION FNBW Limited manufactures two products (X and Y). The overhead costs have been divided into four cost pools that use the following activity drivers: Product X Y Number of Orders Number of Number of labour labour Setups Transactions Hours 60 20 50 2,000 20 80 70 500 Cost per pool 16,000 13,000 2,400 20,000 REQUIRED: a. Compute the allocation rates for each of the activity drivers listed. [8 marks] b. Allocate the overhead costs to Products X and Y using activity-based costing. [18 marks] c. Compute the overhead rate using labour hours under the traditional-based costing system. [4 marks] d. Allocate the overhead costs to Products X and Y using the traditional-based costing system overhead rate calculated in part (c). [4 marks] e. Describe the major differences between a traditional-based cost management system and an activity-based cost management system. [16 marks]
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