Question :Writers company produces 2 products presently

The information related to manufacturing is given below

WRITERS' Company		Yr 2018-19
		Fountain Pen	Ball point
Units		10000	20000
Area occupied (sq feet)		7000	8000
Variable cost Direct		32	25
Fixed Cost - Direct (per unit)		10	8
Rent - Fixed Cost per month (Indirect - common for all products)	3,00,000.00

The Fixed indirect cost of Rent of Rs 3,00,000/- is to be allocated to both the products The company was doing this on the "number of units" basis till now

1. Please compute cost per unit of each product basis the above method.

You have researched and advised Writers' Company to have Activity Based Costing and have gathered data to support the allocation of the Fixed indirect cost as follows :

Break-up of Indirect Fixed Costs Allocation basis

Rent

3,00,000

Area of operations

b. Please compute cost per unit of each product on the new method of allocation

Writers' Company produces 2 products presently

The information related to manufacturing is given below.

WRITERS' Company		Yr 2018-19
		Fountain Pen	Ball point
Units		10000	20000
Area occupied (sq feet)		7000	8000
Variable cost Direct		32	25
Fixed Cost - Direct (per unit)		10	8
Rent - Fixed Cost per month (Indirect - common for all products)	3,00,000.00