a) Calculate the product cost using a Traditional and ABC approach. b) Discuss and analyse alternative methods available to businesses of allocating costs.
a) Calculate the product cost using a Traditional and ABC approach. b) Discuss and analyse alternative methods available to businesses of allocating costs.
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter26: Cost Allocation And Activity-Based Costing
Section: Chapter Questions
Problem 26.8EX: Identifying activity bases in an activity-based cost system Select Foods Inc. uses activity-based...
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Can you please help me with question B
Transcribed Image Text:Question 3
Matilda Manufacturing designs and manufactures four products A, B, C and D for the
telecommunications industry. Output and cost data for the period just ended are as follows:
ABCD
No of production Material
Output runs in the
cost per
unit
period
£
40
80
40
80
Units
15
20
100
350
4
3
6
4
17
Short run variable costs
Set-up costs
Expediting and scheduling costs
Materials Handling Costs
Direct labour
hours per unit
4,000
8,000
7,000
6,000
25,000
1
Direct labour cost per hour is £6. Overhead costs are as follows:
£
Nww.
2
The following cost drivers have been identified:
Short run Variable Costs
Set up costs
Expediting and Scheduling Costs
Materials Handling Costs
Required:
a) Calculate the product cost using a Traditional and ABC approach.
= Production Runs
= Production Runs
= Machine Hours
= Labour Hours
Machine
hours per
unit
~4~~
2
2
2
b) Discuss and analyse alternative methods available to businesses of allocating costs.
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