Question 9 Felista Toys Ltd. (FTL) produces two models of and model- following production and service functions: plastic moulding, machining support activities. The completed toys are transferred to another division for the toys, FTL operates the sy stem. An activr direct labour hour out b FTL main officpackaging, sales and distribution, and all basis of machine or direct labour hours using the three production cost centres system. An activity analysis conducted by a team of FTL's managemen rn ndce funsons lt toys modelk A and mode-B. In producing the toys, FTL operates moulding, machining, assembly, purchasing and certain production tly, FTL absorbed costs to products on the accountants, produced the following estimated budgeted data for 20135: ated budgetedonducted e the three product Basic data Model-A lodel - B atch size Units 1000 180 140 600 umber of batches 100 E180 Direct costs Per unit Quantity (oumber) of planned actvities Batch data etivity urchasing Receiving Per batch of Per batch of Model-A Model-B omponents rchase orders 12 20 faterial receipts icomponents isbursing aterials Production runs heduling roduction etting-up ines Production runs Set-up hours 80 240 nspecting nspections Per unit of Model-A 5.00 5.20 2.50 Per unit of Model-B Unit data 7.00 7.60 3.50 Machine hours foulding lachining Assembly lachine hours Direct labour ours Activity cost analysis per cost pool Moulding Machining Assembly 5,994,000 396,000 3,782,000 198.000 1,232.000 Purchasing components Receiving components 1,232.00 Disbursing materials Scheduling production Setting-up machines Inspecting quality Total indirect costs 480,000 880,000 520,000 592.000 20,074,000 Using traditional absorption costing system, the total indirect costs of 20,074,000 would have been split per production department as follows: Moulding (e8,412.000), Machining (E6.400.000) and Assembly (5,262,000). Required Calculate the unit cost for product model-A and product model-B using the new Activity-Based Costing (ABC) system. Show all your calculations and present your answers to the nearest 60.0 (a) 15 marks (b) Discuss the claim that activity-based costing will provide more accurate data than the company's existing costing system. Where appropriate, use numerical illustrations to support your arguments. 110 marks) Question 9 Felista Toys Ltd. (FTL) produces two models of and model- following production and service functions: plastic moulding, machining support activities. The completed toys are transferred to another division for the toys, FTL operates the sy stem. An activr direct labour hour out b FTL main officpackaging, sales and distribution, and all basis of machine or direct labour hours using the three production cost centres system. An activity analysis conducted by a team of FTL's managemen rn ndce funsons lt toys modelk A and mode-B. In producing the toys, FTL operates moulding, machining, assembly, purchasing and certain production tly, FTL absorbed costs to products on the accountants, produced the following estimated budgeted data for 20135: ated budgetedonducted e the three product Basic data Model-A lodel - B atch size Units 1000 180 140 600 umber of batches 100 E180 Direct costs Per unit Quantity (oumber) of planned actvities Batch data etivity urchasing Receiving Per batch of Per batch of Model-A Model-B omponents rchase orders 12 20 faterial receipts icomponents isbursing aterials Production runs heduling roduction etting-up ines Production runs Set-up hours 80 240 nspecting nspections Per unit of Model-A 5.00 5.20 2.50 Per unit of Model-B Unit data 7.00 7.60 3.50 Machine hours foulding lachining Assembly lachine hours Direct labour ours Activity cost analysis per cost pool Moulding Machining Assembly 5,994,000 396,000 3,782,000 198.000 1,232.000 Purchasing components Receiving components 1,232.00 Disbursing materials Scheduling production Setting-up machines Inspecting quality Total indirect costs 480,000 880,000 520,000 592.000 20,074,000 Using traditional absorption costing system, the total indirect costs of 20,074,000 would have been split per production department as follows: Moulding (e8,412.000), Machining (E6.400.000) and Assembly (5,262,000). Required Calculate the unit cost for product model-A and product model-B using the new Activity-Based Costing (ABC) system. Show all your calculations and present your answers to the nearest 60.0 (a) 15 marks (b) Discuss the claim that activity-based costing will provide more accurate data than the company's existing costing system. Where appropriate, use numerical illustrations to support your arguments. 110 marks)
