son C2 A. Al Azlan Refineries was established in the year 2015 and Mr.Imran is the founder of the company. It is planning to introduce ABC method of costing to refine its existing system of costing. The details of various costs involved is given below: Cost Pool Amount - OMR Engineering 65000 Setups 64000 Labor 50000 Inspection 40000 Factory lease 10000 Factory utilities 30000 Advertising 20000 Training 18000 Demand Creation 20000 Maintenance of leaves 40000 llowing cost drivers and their capacities have been identified: wriver Practical Capacity Activity driver Practical Capacity 4500 Labor hours 2700 Setup hours Engineering hours Inspection hours 1300 1700 Machine hours 7000 550 Number of employees Percentage increase in sales 9000 The cost of the facility-level activities is assigned using machine hours. You are required to create homogeneous cost pools, Identity the activities that belong to each pool and the activity driver that will be used for computing pool rates (5 Marks) B. Mr. Imran, the founder of Al Azian Refineries wants to introduce a new software to control the operations and reporting system of the company. Already the company was using a system of reporting from its inception. Suggest Mr.Imran the various costs he should consider before introducing a new system of operations by following the Life Cycle method of costing with suitable examples. (5 Marks) son C2 A. Al Azlan Refineries was established in the year 2015 and Mr.Imran is the founder of the company. It is planning to introduce ABC method of costing to refine its existing system of costing. The details of various costs involved is given below: Cost Pool Amount - OMR Engineering 65000 Setups 64000 Labor 50000 Inspection 40000 Factory lease 10000 Factory utilities 30000 Advertising 20000 Training 18000 Demand Creation 20000 Maintenance of leaves 40000 llowing cost drivers and their capacities have been identified: wriver Practical Capacity Activity driver Practical Capacity 4500 Labor hours 2700 Setup hours Engineering hours Inspection hours 1300 1700 Machine hours 7000 550 Number of employees Percentage increase in sales 9000 The cost of the facility-level activities is assigned using machine hours. You are required to create homogeneous cost pools, Identity the activities that belong to each pool and the activity driver that will be used for computing pool rates (5 Marks) B. Mr. Imran, the founder of Al Azian Refineries wants to introduce a new software to control the operations and reporting system of the company. Already the company was using a system of reporting from its inception. Suggest Mr.Imran the various costs he should consider before introducing a new system of operations by following the Life Cycle method of costing with suitable examples
