WRITERS' Company Yr 2018-19 Fountain Pen Ball point Units 10000 20000 Area occupied (sq feet) 7000 8000 Variable cost – Direct 32 25 Fixed Cost - Direct (per unit) 10 8 Rent - Fixed Cost per month (Indirect - common for all products) 3,00,000.00 The Fixed indirect cost of Rent of Rs 3,00,000/- is to be allocated to both the products The company was doing this on the "number of units" basis till now.You have researched and advised Writers' Company to have Activity Based Costing and have gathered data to support the allocation of the Fixed indirect cost as follows : Break-up of Indirect Fixed Costs Allocation basis Rent 3,00,000 Area of operations b. Please compute cost per unit of each product on the new method of allocation WRITERS' Company Writers' Company produces 2 products presently
WRITERS' Company
Yr 2018-19
Fountain Pen
Ball point
Units
10000
20000
Area occupied (sq feet)
7000
8000
Variable cost – Direct
32
25
Fixed Cost - Direct (per unit)
10
8
Rent - Fixed Cost per month (Indirect - common for all products)
3,00,000.00
The Fixed indirect cost of Rent of Rs 3,00,000/- is to be allocated to both the products
The company was doing this on the "number of units" basis till now.You have researched and advised Writers' Company to have Activity Based Costing and have gathered data to support the allocation of the Fixed indirect cost as follows :
Break-up of Indirect Fixed Costs
Allocation basis
Rent
3,00,000
Area of operations
b. Please compute cost per unit of each product on the new method of allocation
WRITERS' Company
Writers' Company produces 2 products presently
Step by step
Solved in 2 steps with 1 images
