Question
Use the information provided below to calculate the overhead cost per product using the following costing systems: 3.1 Traditional Absorption Costing, using direct labour hours
Use the information provided below to calculate the overhead cost per product using the following costing systems: 3.1 Traditional Absorption Costing, using direct labour hours as the basis for allocation. (5 marks) 3.2 Activity-Based Costing. (15 marks) INFORMATION Nampak Ltd produces two products viz. Product A and Product B. The same equipment is used to produce both products. Details of the cost of activities, inputs and outputs are as follows: Overheads cost analysis R Production 4 400 000 Materials handling 1 000 000 Set-up 1 050 000 Quality control 1 900 000 Materials procurement 400 000 Cost driver analysis Cost drivers Product A Product B Total Direct labour hours 320 000 180 000 500 000 Number of set-ups 420 280 700 Materials movements 700 300 1 000 Number of orders 1 300 700 2 000 Number of inspections 1 140 760 1 900 Annual output Product A 200 000 units Product B 100 000 units
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