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S has recently attended a course on activity-based costing (ABC). S decides to experiment by applying the principles of ABC to the four products currently
S has recently attended a course on activity-based costing (ABC). S decides to experiment by applying the principles of ABC to the four products currently made and sold by the company. Details of the four products and relevant information are for one period: The four products are similar and are usually produced in production runs of 20 units and sold in batches of 10 units. The production overhead is currently absorbed by using a machine hour rate, and the total of the production overhead for the period has been analyzed as follows: has ascertained that the "cost driver" to be used are as listed below for the overhead cost above: Calculate the total cost for each product if all overhead costs are absorbed on a machine hour basis (traditional). The number of requisitions raised on the stores are 20 for each product and the number of orders executed are 42 , each order being for a batch of 10 of one product
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