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PROBLEM-05 The Aeronautical Ltd. has production facility specializing in jobs for the aircraft components market. The traditional costing system has two direct-cost categories, namely, direct materials and direct manufacturing labour and a single direct cost pool, that is manufacturing overhead allocated on the basis of direct labour hours. The indirect cost allocation rate would have been Tk. 115.00 per direct manufacturing labour hour. Tk. 115 direct manufacturing labour-hours. The company has now decided to replace the single indirect cost pool with five indirect cost pools, representing five activity areas each with its own supervising and budget responsibility. The relevant data are as follows: Activity area Cost driver used as an allocation base Cost allocation rate Material handling Parts Tk. 0.40 Lathe work 0.20 Turns Machine-hours Milling 20.00 Grinding 0.80 Parts Units tested Testing 15.00 Two representative jobs processed under the new system of the facility at the most recent period had the following features: Particulars Job 101 Job 102 Direct material costs per job Tk. 9,700.00 Tk. 59,900.00 Direct manufacturing labour cost per job Tk. 750.00 Tk.11,250.00 Direct manufacturing labour-hours per job 25 375 Parts per job 500 2,000 Turns per job 20,000 60,000 Machine -hours per job 150 1,050 Units per job 10 200 Required: (a) Compute the per unit manufacturing cost of each job under the traditional job-cutting system. (b) Compute the per unit manufacturing costs of each job under the activity-based costing system.

PROBLEM-05 The Aeronautical Ltd. has production facility specializing in jobs for the aircraft components market. The traditional costing system has two direct-cost categories, namely, direct materials and direct manufacturing labour and a single direct cost pool, that is manufacturing overhead allocated on the basis of direct labour hours. The indirect cost allocation rate would have been Tk. 115.00 per direct manufacturing labour hour. Tk. 115 direct manufacturing labour-hours. The company has now decided to replace the single indirect cost pool with five indirect cost pools, representing five activity areas each with its own supervising and budget responsibility. The relevant data are as follows: Activity area Cost driver used as an allocation base Cost allocation rate Material handling Parts Tk. 0.40 Lathe work 0.20 Turns Machine-hours Milling 20.00 Grinding 0.80 Parts Units tested Testing 15.00 Two representative jobs processed under the new system of the facility at the most recent period had the following features: Particulars Job 101 Job 102 Direct material costs per job Tk. 9,700.00 Tk. 59,900.00 Direct manufacturing labour cost per job Tk. 750.00 Tk.11,250.00 Direct manufacturing labour-hours per job 25 375 Parts per job 500 2,000 Turns per job 20,000 60,000 Machine -hours per job 150 1,050 Units per job 10 200 Required: (a) Compute the per unit manufacturing cost of each job under the traditional job-cutting system. (b) Compute the per unit manufacturing costs of each job under the activity-based costing system.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter5: Process Costing
Section: Chapter Questions
Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...
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PROBLEM-05 The Aeronautical Ltd. has production facility specializing in jobs for the aircraft components market. The traditional costing system has two direct-cost categories, namely, direct materials and direct manufacturing labour and a single direct cost pool, that is manufacturing overhead allocated on the basis of direct labour hours. The indirect cost allocation rate would have been Tk. 115.00 per direct manufacturing labour hour. Tk. 115 direct manufacturing labour-hours. The company has now decided to replace the single indirect cost pool with five indirect cost pools, representing five activity areas each with its own supervising and budget responsibility. The relevant data are as follows: Activity area Cost driver used as an allocation base Cost allocation rate Material handling Parts Tk. 0.40 Lathe work 0.20 Turns Machine-hours Milling 20.00 Grinding 0.80 Parts Units tested Testing 15.00 Two representative jobs processed under the new system of the facility at the most recent period had the following features: Particulars Job 101 Job 102 Direct material costs per job Tk. 9,700.00 Tk. 59,900.00 Direct manufacturing labour cost per job Tk. 750.00 Tk.11,250.00 Direct manufacturing labour-hours per job 25 375 Parts per job 500 2,000 Turns per job 20,000 60,000 Machine -hours per job 150 1,050 200 Units per job 10 Required: (a) Compute the per unit manufacturing cost of each job under the traditional job-cutting system. (b) Compute the per unit manufacturing costs of each job under the activity-based costing system.
Transcribed Image Text:PROBLEM-05 The Aeronautical Ltd. has production facility specializing in jobs for the aircraft components market. The traditional costing system has two direct-cost categories, namely, direct materials and direct manufacturing labour and a single direct cost pool, that is manufacturing overhead allocated on the basis of direct labour hours. The indirect cost allocation rate would have been Tk. 115.00 per direct manufacturing labour hour. Tk. 115 direct manufacturing labour-hours. The company has now decided to replace the single indirect cost pool with five indirect cost pools, representing five activity areas each with its own supervising and budget responsibility. The relevant data are as follows: Activity area Cost driver used as an allocation base Cost allocation rate Material handling Parts Tk. 0.40 Lathe work 0.20 Turns Machine-hours Milling 20.00 Grinding 0.80 Parts Units tested Testing 15.00 Two representative jobs processed under the new system of the facility at the most recent period had the following features: Particulars Job 101 Job 102 Direct material costs per job Tk. 9,700.00 Tk. 59,900.00 Direct manufacturing labour cost per job Tk. 750.00 Tk.11,250.00 Direct manufacturing labour-hours per job 25 375 Parts per job 500 2,000 Turns per job 20,000 60,000 Machine -hours per job 150 1,050 200 Units per job 10 Required: (a) Compute the per unit manufacturing cost of each job under the traditional job-cutting system. (b) Compute the per unit manufacturing costs of each job under the activity-based costing system.
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