FUND.ACCT.PRIN.-CONNECT ACCESS
FUND.ACCT.PRIN.-CONNECT ACCESS
25th Edition
ISBN: 9781264217021
Author: Wild
Publisher: MCG
Question
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Chapter C, Problem 12E

1.

To determine

Concept Introduction:

Activity-based costing: Activity-based costing is one of the cost allocation methods where overhead costs are allocated based on activity usage. It can be determined by using multiplying activity rate and activity usage. Activities can be classified as production, setups, design, and factory services.

The product cost per unit for each product.

2.

To determine

Concept Introduction:

Activity-based costing: Activity-based costing is one of the cost allocation methods where overhead costs are allocated based on activity usage. It can be determined by using multiplying activity rate and activity usage. Activities can be classified as production, setups, design, and factory services.

The product cost per unit on activity-based costing method for each product.

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Question 1 Trimake Limited makes three main products, using broadly the same production methods and equipment for each. A conventional product costing system is used at present, although an activity-based costing (ABC) system is being considered. Details of the three products for a typical period are: Product X Product Y Product Z Hours per unit Labour hours ½ 1½ 1 Product X Product Y Product Z Costs relating to setups Costs relating to machinery Costs relating to materials handling Costs relating to inspection Total production overhead Required: Machine unit 1½ 1 3 Direct labour costs £14 per hour and production overheads are absorbed on a machine-hour basis. The rate for the period is £28 per machine hour. a) You are required to calculate the cost per unit for each product using conventional methods. Further analysis shows that the total of production overheads can be divided as follows: Number of set-ups 75 115 480 670 The following activity volumes are associated with the product…
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