Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The company has produced the following budgeted information for August 2022: Larder Built-in fridge fridge American style fridge freezer 400 300 250 Total Sales and

The company has produced the following budgeted information for August 2022: Larder Built-in fridge fridge American style fridge freezer 400 300 250 Total Sales and production (units) Unit Selling Price (E) 350 450 1,500 Unit Material Cost (E) 50 65 885 Unit Labour cost (E) 80 100 230 Total number of 4 6 5 purchase orders Production set-ups per 4 3 2 unit Total number of 10 50 in deliveries V2 2122 Production overheads Purchasing costs 85,000 Production run set-up costs 80,000 Delivery costs 34,000 199,000 Labour rate is 20 per hour. 2022 Northem Consortium Ltd. Page 8 of 10 IDBMA001 Management Accounting The sales manager is shocked when it is reported that the American style fridge freezer is not a viable product due to low profitability per unit. You are the management accountant and the sales manager asks you to investigate the profitability of the American style fridge freezer. (a) Calculate the profit per unit of each of the three products using the current [8] absorption costing system (showing calculations and your answer to two decimal places). (b) Your calculation should include how the total cost is made up for each of the three products. Calculate a revised profit per unit for each of the three products using an activity-based costing (ABC) approach (showing calculations and your answer to two decimal places). Your answer should show clearly how the total cost is made up for each of the three products. [12]

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

Step: 3

blur-text-image

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

Acca Financial Reporting

Authors: BPP Learning Media

1st Edition

1509784888, 978-1509784882

More Books

Students also viewed these Accounting questions