Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

r13 (ii) Statement showing overhead cost per unit (based on activity based costing method) Cost per Products A ou units Machine Howrse Rs. 103.32 A

image text in transcribed

r13 (ii) Statement showing overhead cost per unit (based on activity based costing method) Cost per Products A ou units Machine Howrse Rs. 103.32 A 5.000 20.000 Cost related cont related to Cont related to Total to Volume purchases sel Activities RA Rs. R. RA 78.660 1.81.764.80 2.56.250 5.16.614.80 (20.000 hrs x (160 orders (20 setups Rs. 3.93) Rs. 1136.03) Rs. 12.812.50) 4,36,235.52 5.63.750 14.715855 2 24.53 (1,20,000 hes. (384 onders X (44 setups xRs.3.93) Rs. 1136,03) Rs. 12.812.50) B B 60,000 1,20,000 4.71.600 Note: Refer to basic workings 2.3 and 4 for computing costs related to volume activities, set-ups and purchases respectively. Illustration 2: Major Ltd. manufactures two products A and B. The product A is a low-volume item and its sales are only 5,000 units per annum. The product B is a high- volume item and sales are 20,000 units per annum. Both products require two direct labour-hours for completion. The company works 50,000 direct labour-hours each year as given below: Hours Product A 5.000 units x 2 hours 10,000 Product B 20.000 units x 2 hours 40,000 50,000 Details of costs for material and labour for each product (per unit) are given below: Product Direct Materials Rs. 25 Rs. 15 Direct Materials Rs. 25 Rs. 15 Direct Labour (at Rs. 5 per hour) 10 10 The company's total manufacturing overheads costs are Rs. 8,75.000 per annum. The company has analysed its operations and has determined that five activities act as cost drivers in the incurrence of overhead costs. Data relating to the five activities are given below: Activity Machine setups Traceable Costs Rs. 2.30,000 1.60,000 Number of Events or Transactions Total Product A Product B 5.000 3.000 2.000 8.000 5.000 3,000 600 200 400 40.000 12.000 28.000 Quality inspections Production orders Machine-hours worked Material receipts Total 81,000 3.14,000 90.000 8.75.000 750 150 600 You are required to compute per unit cost for each product using: (1) Direct Labour Hour Rate Method for absorption of overhead costs. m) Activity Based Costing Technique for absorption of overhead costs

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditors Letter Handbook

Authors: American Bar Association Business Law Section

2nd Edition

161438973X, 978-1614389736

More Books

Students also viewed these Accounting questions

Question

Find the Fourier transform of the function f (t) = e-a|t|.

Answered: 1 week ago

Question

Perform the indicated divisions. (5sT)(88T ) 10s7 2

Answered: 1 week ago

Question

4-6 Is there a digital divide? If so, why does it matter?

Answered: 1 week ago