Particulars <\/span><\/p>\n<\/td>\n

A<\/span><\/p>\n<\/td>\n

B<\/span><\/p>\n<\/td>\n

C<\/span><\/p>\n<\/td>\n<\/tr>\n

Production units <\/span><\/p>\n<\/td>\n

2,000<\/span><\/p>\n<\/td>\n

1,000<\/span><\/p>\n<\/td>\n

1,000<\/span><\/p>\n<\/td>\n<\/tr>\n

Direct materials ($per kg)<\/span><\/p>\n<\/td>\n

20<\/span><\/p>\n<\/td>\n

10<\/span><\/p>\n<\/td>\n

30<\/span><\/p>\n<\/td>\n<\/tr>\n

Direct labour (minute per unit)<\/span><\/p>\n<\/td>\n

15<\/span><\/p>\n<\/td>\n

30<\/span><\/p>\n<\/td>\n

60<\/span><\/p>\n<\/td>\n<\/tr>\n

Batches of materials\u00a0 <\/span><\/p>\n<\/td>\n

5<\/span><\/p>\n<\/td>\n

6<\/span><\/p>\n<\/td>\n

9<\/span><\/p>\n<\/td>\n<\/tr>\n

Machine hours per unit <\/span><\/p>\n<\/td>\n

0.50<\/span><\/p>\n<\/td>\n

0.40<\/span><\/p>\n<\/td>\n

0.25<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Materials dispatch (in 100 units pack each)<\/span><\/p>\n

Wage rate per hour $20<\/span><\/p>\n

Direct expenses is 50% of direct labour <\/span><\/p>\n

Overhead rate $25.50 per hour based on labour hours<\/span><\/p>\n

Cost and cost drivers:<\/span><\/p>\n\n\n\n\n\n\n

\n Cost items <\/span><\/p>\n<\/td>\n	\n Cost drivers <\/span><\/p>\n<\/td>\n	\n % of total overhead <\/span><\/p>\n<\/td>\n<\/tr>\n
\n Materials receipt and inspection<\/span><\/p>\n<\/td>\n	\n No. of batches <\/span><\/p>\n<\/td>\n	\n 40%<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Process power<\/span><\/p>\n<\/td>\n	\n Machine hours <\/span><\/p>\n<\/td>\n	\n 25%<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Materials\u00a0 handling<\/span><\/p>\n<\/td>\n	\n No. of materials dispatch<\/span><\/p>\n<\/td>\n	\n 35%<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Required: <\/span><\/p>\n (a) Total overhead and apportionment of overhead; (c) Total cost and cost per unit under volume based costing<\/span><\/p>\n (c) Cost driver rate; (d) Total cost and cost per unit under activity based costing<\/span><\/p>\n [Answer:\u00a0 (a) Total overhead $51,000 and $20,400; $12,750; $17,850;<\/span><\/i><\/p>\n (b) Total cost: A = $66,250; B = $46,250; C = $72,500;<\/span><\/i><\/p>\n CPU: A = $33.13; B = $46.25; C = $72.50; <\/span><\/i><\/p>\n (c) CDR: $1,020; $7.727; $446.25;<\/span><\/i><\/p>\n (d) Total cost: A = $76,752; B = $48,674; C = $65,574;<\/span><\/i><\/p>\n CPU: A = $38.38; B = $48.67; C = $65.57]<\/span><\/i><\/p>\n SOLUTION: <\/span><\/b><\/p>\n\n\n\n\n\n\n\n \n Labour hours<\/span><\/i><\/b><\/p>\n<\/td>\n \n = Output x LHPU<\/span><\/i><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n \n A<\/span><\/i><\/p>\n<\/td>\n \n = 2,000 x 15\/60<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/i><\/p>\n<\/td>\n \n 500<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n \n B<\/span><\/i><\/p>\n<\/td>\n \n = 1,000 x 30\/60<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/i><\/p>\n<\/td>\n \n \u00a0500<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n \n C<\/span><\/i><\/p>\n<\/td>\n \n = 1,000 x 60\/60<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/i><\/p>\n<\/td>\n \n 1,000<\/span><\/u><\/i><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 2,000 hours <\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Total overhead <\/span><\/b><\/p>\n\n\n\n\n\n\n \n Labour hour rate<\/span><\/p>\n<\/td>\n \n =<\/span><\/p>\n<\/td>\n \n Total overhead <\/span>\u00f7<\/span> Total labour hours <\/span><\/p>\n<\/td>\n<\/tr>\n \n 25.50<\/span><\/p>\n<\/td>\n \n =<\/span><\/p>\n<\/td>\n \n Total overhead <\/span>\u00f7<\/span> 2,000 hours <\/span><\/p>\n<\/td>\n<\/tr>\n \n 25.50 \u00d7 2,000<\/span><\/p>\n<\/td>\n \n =<\/span><\/p>\n<\/td>\n \n Total overhead<\/span><\/p>\n<\/td>\n<\/tr>\n \n Total overhead<\/span><\/p>\n<\/td>\n \n =<\/span><\/p>\n<\/td>\n \n $51,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Apportionment of overhead <\/span><\/b><\/b><\/p>\n\n\n\n\n\n\n \n Materials receipt and inspection<\/span><\/b><\/p>\n<\/td>\n \n = $51,000 @ 40%<\/span><\/b><\/p>\n<\/td>\n \n = 20,400<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n \n Process power<\/span><\/p>\n<\/td>\n \n = $51,000 @ 25%<\/span><\/p>\n<\/td>\n \n = 12,750<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials handling<\/span><\/p>\n<\/td>\n \n = $51,000 @ 35%<\/span><\/p>\n<\/td>\n \n = 17,850<\/span><\/u><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n $51,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/span><\/b><\/p>\n Cost Statement under Conventional Costing<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars \u2193\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Output <\/span>\u00ae<\/span><\/p>\n<\/td>\n \n A = 2,000<\/span><\/p>\n<\/td>\n \n B = 1,000<\/span><\/p>\n<\/td>\n \n C = 1,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct materials<\/span><\/p>\n<\/td>\n \n [Output x\u00a0 MCPU]<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct labour<\/span><\/p>\n<\/td>\n \n [Output x LCPU x $20] <\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct expenses<\/span><\/p>\n<\/td>\n \n [50% of direct labour]<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Prime cost<\/span><\/p>\n<\/td>\n \n 55,000<\/span><\/p>\n<\/td>\n \n 35,000<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Add: Overhead (based on labour hour)<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 [Labour hours x $22.50]<\/span><\/p>\n<\/td>\n \n 11,250<\/span><\/p>\n<\/td>\n \n 11,250<\/span><\/p>\n<\/td>\n \n 22,500<\/span><\/p>\n<\/td>\n<\/tr>\n \n Total cost <\/span><\/p>\n<\/td>\n \n 66,250<\/span><\/p>\n<\/td>\n \n 46,250<\/span><\/p>\n<\/td>\n \n 72,500<\/span><\/p>\n<\/td>\n<\/tr>\n \n Output <\/span><\/p>\n<\/td>\n \n 2,000<\/span><\/p>\n<\/td>\n \n 1,000<\/span><\/p>\n<\/td>\n \n 1,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cost per unit\u00a0 = Total cost \u00f7 Output<\/span><\/p>\n<\/td>\n \n 33.13<\/span><\/p>\n<\/td>\n \n 46.25<\/span><\/p>\n<\/td>\n \n 72.50<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Calculation of Cost Driver Rate<\/span><\/b><\/p>\n\n\n\n\n\n\n\n \n Activities <\/span><\/p>\n<\/td>\n \n Amount <\/span><\/p>\n<\/td>\n \n Cost Driver (CD)<\/span><\/p>\n<\/td>\n \n Total CD<\/span><\/p>\n<\/td>\n \n CD Rate<\/span><\/p>\n<\/td>\n<\/tr>\n \n 1<\/span><\/i><\/p>\n<\/td>\n \n 2<\/span><\/i><\/p>\n<\/td>\n \n 3<\/span><\/i><\/p>\n<\/td>\n \n 4<\/span><\/i><\/p>\n<\/td>\n \n 5\u00a0 = 2 \u00f7\u00a0 4<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n Materials receipt <\/span><\/p>\n<\/td>\n \n 20,400<\/span><\/p>\n<\/td>\n \n No. of batches <\/span><\/p>\n<\/td>\n \n 20<\/span><\/p>\n<\/td>\n \n 1,020.000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Process power<\/span><\/p>\n<\/td>\n \n 12,750<\/span><\/p>\n<\/td>\n \n Machine hours <\/span><\/p>\n<\/td>\n \n 1,650<\/span><\/p>\n<\/td>\n \n 7.727<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials\u00a0 handling<\/span><\/p>\n<\/td>\n \n 17,850<\/span><\/p>\n<\/td>\n \n No. of materials dispatch<\/span><\/p>\n<\/td>\n \n 40<\/span><\/p>\n<\/td>\n \n 446.250<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Working note for total cost driver<\/span><\/i><\/p>\n No. of batches \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/i><\/p>\n = A + B + C \u00a0\u00a0 <\/span><\/i>\u00a0\u00a0\u00a0 <\/span><\/i><\/p>\n = 5 + 6 + 9\u00a0\u00a0\u00a0 <\/span><\/i>\u00a0\u00a0\u00a0 <\/span><\/i><\/p>\n = 20<\/span><\/i><\/p>\n \u00a0<\/span><\/i><\/p>\n\n\n\n\n\n\n\n \n Machine hours = Output x MHPU<\/span><\/i><\/p>\n<\/td>\n \n No. of dispatches = Output \u00f7 100 units\u00a0 <\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n A<\/span><\/i><\/p>\n<\/td>\n \n = 2,000 x 0.50<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/i><\/p>\n<\/td>\n \n 1,000<\/span><\/i><\/p>\n<\/td>\n \n A<\/span><\/i><\/p>\n<\/td>\n \n = 2,000 \u00f7 100<\/span><\/i><\/p>\n<\/td>\n \n = 20<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n B<\/span><\/i><\/p>\n<\/td>\n \n = 1,000 x 0.40<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/i><\/p>\n<\/td>\n \n 400<\/span><\/i><\/p>\n<\/td>\n \n B<\/span><\/i><\/p>\n<\/td>\n \n = 1,000 \u00f7 100<\/span><\/i><\/p>\n<\/td>\n \n = 10<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n C<\/span><\/i><\/p>\n<\/td>\n \n 1,000 x 0.25<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/u><\/i><\/i><\/p>\n<\/td>\n \n 250<\/span><\/u><\/i><\/i><\/p>\n<\/td>\n \n C<\/span><\/i><\/p>\n<\/td>\n \n = 1,000 \u00f7 100<\/span><\/i><\/p>\n<\/td>\n \n = 10<\/span><\/u><\/i><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 1,650 hours <\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n = 40<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Cost Statement under Activity Based Costing<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars \u2193\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Output <\/span>\u00ae<\/span><\/p>\n<\/td>\n \n A = 2,000<\/span><\/p>\n<\/td>\n \n B = 1,000<\/span><\/p>\n<\/td>\n \n C = 1,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct materials<\/span><\/p>\n<\/td>\n \n [Output \u00d7\u00a0 MCPU]<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct labour<\/span><\/p>\n<\/td>\n \n [Output \u00d7 LCPU \u00d7 $20] <\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct expenses<\/span><\/p>\n<\/td>\n \n [50% of direct labour]<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Prime cost<\/span><\/p>\n<\/td>\n \n 55,000<\/span><\/p>\n<\/td>\n \n 35,000<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Add: Overhead (based on ABC)<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials R & I<\/span><\/p>\n<\/td>\n \n [No. of batches \u00a0\u00a0\u00a0\u00a0\u00a0 \u00d7 $1,020]<\/span><\/p>\n<\/td>\n \n 5,100<\/span><\/p>\n<\/td>\n \n 6,120<\/span><\/p>\n<\/td>\n \n 9,180<\/span><\/p>\n<\/td>\n<\/tr>\n \n Process power<\/span><\/p>\n<\/td>\n \n [Machine hours \u00a0\u00a0\u00a0\u00a0 \u00d7 $7.727]<\/span><\/p>\n<\/td>\n \n 7,727<\/span><\/p>\n<\/td>\n \n 3,091<\/span><\/p>\n<\/td>\n \n 1,932<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials handling<\/span><\/p>\n<\/td>\n \n [No. of dispatches \u00d7 $446.25]<\/span><\/p>\n<\/td>\n \n 8,925<\/span><\/p>\n<\/td>\n \n 4,463<\/span><\/p>\n<\/td>\n \n 4,462<\/span><\/p>\n<\/td>\n<\/tr>\n \n Total cost <\/span><\/p>\n<\/td>\n \n 76,752<\/span><\/p>\n<\/td>\n \n 48,674<\/span><\/p>\n<\/td>\n \n 65,574<\/span><\/p>\n<\/td>\n<\/tr>\n \n Output <\/span><\/p>\n<\/td>\n \n 2,000<\/span><\/p>\n<\/td>\n \n 1,000<\/span><\/p>\n<\/td>\n \n 1,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cost per unit\u00a0 = Total cost \u00f7 Output<\/span><\/p>\n<\/td>\n \n 38.38<\/span><\/p>\n<\/td>\n \n 48.67<\/span><\/p>\n<\/td>\n \n 65.57<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 2F<\/span><\/b><\/p>\n Usha Components (P) Ltd has following data on 31st<\/sup> December:<\/b><\/span><\/p>\n\n\n\n\n\n\n \n Particulars <\/span>\u2193<\/span>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Products <\/span>\u00ae<\/span><\/p>\n<\/td>\n \n X<\/span><\/p>\n<\/td>\n \n Y<\/span><\/p>\n<\/td>\n \n Z<\/span><\/p>\n<\/td>\n<\/tr>\n \n Output in units <\/span><\/p>\n<\/td>\n \n 2,000<\/span><\/p>\n<\/td>\n \n 1,500<\/span><\/p>\n<\/td>\n \n 800<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct materials per unit in $<\/span><\/p>\n<\/td>\n \n 10<\/span><\/p>\n<\/td>\n \n 6<\/span><\/p>\n<\/td>\n \n 12<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct labour per unit in minute<\/span><\/p>\n<\/td>\n \n 24<\/span><\/p>\n<\/td>\n \n 40<\/span><\/p>\n<\/td>\n \n 60<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Wage rate per hour $24. <\/span><\/p>\n \u00a0<\/span><\/p>\n Other information:<\/span><\/p>\n\n\n\n\n\n\n \n Particulars <\/span>\u2193<\/span>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/p>\n<\/td>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 X<\/span><\/p>\n<\/td>\n \n Y<\/span><\/p>\n<\/td>\n \n Z<\/span><\/p>\n<\/td>\n<\/tr>\n \n No. of materials batches <\/span><\/p>\n<\/td>\n \n 10<\/span><\/p>\n<\/td>\n \n 15<\/span><\/p>\n<\/td>\n \n 10<\/span><\/p>\n<\/td>\n<\/tr>\n \n Machine hours per unit <\/span><\/p>\n<\/td>\n \n 6<\/span><\/p>\n<\/td>\n \n 3<\/span><\/p>\n<\/td>\n \n 2<\/span><\/p>\n<\/td>\n<\/tr>\n \n Quantity of materials handling in units <\/span><\/p>\n<\/td>\n \n 8,000<\/span><\/p>\n<\/td>\n \n 9,000<\/span><\/p>\n<\/td>\n \n 2,400<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Cost and cost drivers:<\/span><\/p>\n\n\n\n\n\n\n \n Cost items <\/span><\/p>\n<\/td>\n \n Cost drivers <\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials receipt and inspection<\/span><\/p>\n<\/td>\n \n No. of batches <\/span><\/p>\n<\/td>\n \n 32,410<\/span><\/p>\n<\/td>\n<\/tr>\n \n Process power<\/span><\/p>\n<\/td>\n \n Machine hours <\/span><\/p>\n<\/td>\n \n 30,770<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials\u00a0 handling<\/span><\/p>\n<\/td>\n \n Quantity of materials handling <\/span><\/p>\n<\/td>\n \n 25,220<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Required: \u00a0(1) Cost statement under traditional costing showing total cost and cost per unit.<\/span><\/p>\n (2) Cost statement under ABC showing total cost and cost per unit.<\/span><\/p>\n (3) Change cost per unit based on traditional costing.<\/span><\/p>\n \u00a0[Answers: <\/span><\/i><\/p>\n \n\n\n\n\n\n\n\n\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n A<\/span><\/i><\/p>\n<\/td>\n \n B<\/span><\/i><\/p>\n<\/td>\n \n C<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n 1 <\/span><\/i><\/p>\n<\/td>\n \n Total cost <\/span><\/i><\/p>\n<\/td>\n \n 66,400<\/span><\/i><\/p>\n<\/td>\n \n 67,000<\/span><\/i><\/p>\n<\/td>\n \n 56,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n CPU<\/span><\/i><\/p>\n<\/td>\n \n 33.20<\/span><\/i><\/p>\n<\/td>\n \n 44.67<\/span><\/i><\/p>\n<\/td>\n \n 70.00<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n 2<\/span><\/i><\/p>\n<\/td>\n \n Total cost <\/span><\/i><\/p>\n<\/td>\n \n 79,260<\/span><\/i><\/p>\n<\/td>\n \n 66,240<\/span><\/i><\/p>\n<\/td>\n \n 43,900<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n CPU<\/span><\/i><\/p>\n<\/td>\n \n 39.63<\/span><\/i><\/p>\n<\/td>\n \n 44.16<\/span><\/i><\/p>\n<\/td>\n \n 54.88<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n 3<\/span><\/i><\/p>\n<\/td>\n \n % change <\/span><\/i><\/p>\n<\/td>\n \n 19.367%<\/span><\/i><\/p>\n<\/td>\n \n 1.142%<\/span><\/i><\/p>\n<\/td>\n \n 21.60%<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n  <\/p>\n SOLUTION: <\/span><\/b><\/p>\n Given and working note: <\/span><\/i><\/p>\n\n\n\n\n\n\n\n \n DLH<\/span><\/i><\/p>\n<\/td>\n \n = Output \u00d7 Minute \u00f7 60<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n Labour hours rate <\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n X<\/span><\/i><\/p>\n<\/td>\n \n = 2,000 \u00d7 24 \u00f7 60<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/i><\/p>\n<\/td>\n \n 800<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n = Total overhead \u00f7 Total labour hours <\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n Y<\/span><\/i><\/p>\n<\/td>\n \n = 1,500 \u00d7 40 \u00f7 60<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/i><\/p>\n<\/td>\n \n 1,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n = $88,400 \u00f7 2,600 hours<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n Z<\/span><\/i><\/p>\n<\/td>\n \n =\u00a0\u00a0\u00a0 800 \u00d7 60 \u00f7 60<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/u><\/i><\/i><\/p>\n<\/td>\n \n 800<\/span><\/u><\/i><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n = $34<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 2,600<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Cost Statement under Traditional Costing<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars <\/span><\/p>\n<\/td>\n \n Products<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n X = 2,000<\/span><\/p>\n<\/td>\n \n Y= 1,500<\/span><\/p>\n<\/td>\n \n Z = 800<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct materials \u00a0\u00a0\u00a0\u00a0 [Output \u00d7 RMPU]<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n 9,000<\/span><\/p>\n<\/td>\n \n 9,600<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct labour \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 [DLH \u00d7 $24]<\/span><\/p>\n<\/td>\n \n 19,200<\/span><\/p>\n<\/td>\n \n 24,000<\/span><\/p>\n<\/td>\n \n 19,200<\/span><\/p>\n<\/td>\n<\/tr>\n \n Prime cost<\/span><\/p>\n<\/td>\n \n 39,200<\/span><\/p>\n<\/td>\n \n 33,000<\/span><\/p>\n<\/td>\n \n 28,800<\/span><\/p>\n<\/td>\n<\/tr>\n \n Add: Overhead (based on labour\u00a0 hour):<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Labour expenses DLH \u00d7 Labour hour rate)<\/span><\/p>\n<\/td>\n \n 27,200<\/span><\/p>\n<\/td>\n \n 34,000<\/span><\/p>\n<\/td>\n \n 27,200<\/span><\/p>\n<\/td>\n<\/tr>\n \n Total cost <\/span><\/p>\n<\/td>\n \n $66,400<\/span><\/p>\n<\/td>\n \n $67,000<\/span><\/p>\n<\/td>\n \n $56,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Output <\/span><\/p>\n<\/td>\n \n 2,000<\/span><\/p>\n<\/td>\n \n 1,500<\/span><\/p>\n<\/td>\n \n 800<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cost per units = Total cost \u00f7 Output<\/span><\/p>\n<\/td>\n \n $33.20<\/span><\/p>\n<\/td>\n \n $44.67<\/span><\/p>\n<\/td>\n \n $70.00<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/b><\/p>\n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/b><\/p>\n Calculation of Cost Driver Rate<\/span><\/b><\/p>\n\n\n\n\n\n\n\n \n Activities <\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Cost Driver (CD)<\/span><\/p>\n<\/td>\n \n Total CD<\/span><\/p>\n<\/td>\n \n CD Rate<\/span><\/p>\n<\/td>\n<\/tr>\n \n 1<\/span><\/i><\/p>\n<\/td>\n \n 2<\/span><\/i><\/p>\n<\/td>\n \n 3<\/span><\/i><\/p>\n<\/td>\n \n 4<\/span><\/i><\/p>\n<\/td>\n \n 5\u00a0 = 2 \u00f7\u00a0 4<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n Materials receipt and inspection <\/span><\/p>\n<\/td>\n \n 32,410<\/span><\/p>\n<\/td>\n \n No. of batch<\/span><\/p>\n<\/td>\n \n 35<\/span><\/p>\n<\/td>\n \n 926.00<\/span><\/p>\n<\/td>\n<\/tr>\n \n Process power <\/span><\/p>\n<\/td>\n \n 30,770<\/span><\/p>\n<\/td>\n \n Machine hours <\/span><\/p>\n<\/td>\n \n 18,100<\/span><\/p>\n<\/td>\n \n 1.70<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials handling\u00a0 <\/span><\/p>\n<\/td>\n \n 25,220<\/span><\/p>\n<\/td>\n \n Quantity of materials<\/span><\/p>\n<\/td>\n \n 19,400<\/span><\/p>\n<\/td>\n \n 1.30<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Working note for total cost driver<\/span><\/i><\/p>\n\n\n\n\n\n\n\n \n No. of batch<\/span><\/i><\/p>\n<\/td>\n \n Process power = Output \u00d7 MH<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n Quantity of materials <\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n X \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 = 10<\/span><\/i><\/p>\n<\/td>\n \n X \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 = 2,000 \u00d7 6<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/i><\/p>\n<\/td>\n \n 12,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n X \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 = 8,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n Y \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 = 15<\/span><\/i><\/p>\n<\/td>\n \n Y\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 = 1,500 \u00d7 3<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/i><\/p>\n<\/td>\n \n ,500<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n Y\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 = 9,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n Z \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 = 10<\/u><\/span><\/i><\/p>\n<\/td>\n \n Z\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 =\u00a0\u00a0\u00a0 800 \u00d7 2<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/u><\/i><\/i><\/p>\n<\/td>\n \n 1,600<\/span><\/u><\/i><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n Z\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 = 2,400<\/u><\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a035<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 18,100<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 19,400<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/span><\/b><\/p>\n Cost Statement under Activity Based Cost (ABC)<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars <\/span><\/p>\n<\/td>\n \n Products<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n X = 2,000<\/span><\/p>\n<\/td>\n \n Y = 1,500<\/span><\/p>\n<\/td>\n \n Z = 800<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct materials \u00a0\u00a0\u00a0\u00a0 [Output \u00d7 RMPU]<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n 9,000<\/span><\/p>\n<\/td>\n \n 9,600<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct labour \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 [DLH \u00d7 $12]<\/span><\/p>\n<\/td>\n \n 19,200<\/span><\/p>\n<\/td>\n \n 24,000<\/span><\/p>\n<\/td>\n \n 19,200<\/span><\/p>\n<\/td>\n<\/tr>\n \n Prime cost<\/span><\/p>\n<\/td>\n \n 39,200<\/span><\/p>\n<\/td>\n \n 33,000<\/span><\/p>\n<\/td>\n \n 28,800<\/span><\/p>\n<\/td>\n<\/tr>\n \n Add: Overhead (based on ABC):<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials receipt and inspection<\/span><\/p>\n<\/td>\n \n [No. of batch \u00d7 $926]<\/span><\/p>\n<\/td>\n \n 9,260<\/span><\/p>\n<\/td>\n \n 13,890<\/span><\/p>\n<\/td>\n \n 9,260<\/span><\/p>\n<\/td>\n<\/tr>\n \n Process power<\/span><\/p>\n<\/td>\n \n [Machine hours\u00a0 \u00d7 $1.70]<\/span><\/p>\n<\/td>\n \n 20,400<\/span><\/p>\n<\/td>\n \n 7,650<\/span><\/p>\n<\/td>\n \n 2,720<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials handling<\/span><\/p>\n<\/td>\n \n [Qty. of materials \u00d7 $1.30]<\/span><\/p>\n<\/td>\n \n 10,400<\/span><\/p>\n<\/td>\n \n 11,700<\/span><\/p>\n<\/td>\n \n 3,120<\/span><\/p>\n<\/td>\n<\/tr>\n \n Total cost <\/span><\/p>\n<\/td>\n \n $79,260<\/span><\/p>\n<\/td>\n \n $66,240<\/span><\/p>\n<\/td>\n \n $43,900<\/span><\/p>\n<\/td>\n<\/tr>\n \n Output <\/span><\/p>\n<\/td>\n \n 2,000<\/span><\/p>\n<\/td>\n \n 1,500<\/span><\/p>\n<\/td>\n \n 800<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cost per units \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 = Total cost \u00f7 Output<\/span><\/p>\n<\/td>\n \n $39.63<\/span><\/p>\n<\/td>\n \n $44.16<\/span><\/p>\n<\/td>\n \n $54.88<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/span><\/b><\/p>\n Percentage change based on Traditional Costing<\/span><\/b><\/p>\n\n\n\n\n\n\n\n \n Particulars <\/span><\/p>\n<\/td>\n \n X<\/span><\/p>\n<\/td>\n \n Y<\/span><\/p>\n<\/td>\n \n Z<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cost per unit as per traditional costing <\/span><\/p>\n<\/td>\n \n 33.20<\/span><\/p>\n<\/td>\n \n 44.67<\/span><\/p>\n<\/td>\n \n 70.00<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cost per unit as per ABC <\/span><\/p>\n<\/td>\n \n 39.63<\/span><\/p>\n<\/td>\n \n 44.16<\/span><\/p>\n<\/td>\n \n 54.88<\/span><\/p>\n<\/td>\n<\/tr>\n \n Change or different<\/span><\/p>\n<\/td>\n \n 6.43<\/span><\/p>\n<\/td>\n \n 0.51<\/span><\/p>\n<\/td>\n \n 15.12<\/span><\/p>\n<\/td>\n<\/tr>\n \n % change based on traditional costing\u00a0 =(change <\/span>\u00f7<\/span> traditional costing) \u00d7 100<\/span><\/p>\n<\/td>\n \n 19.367%<\/span><\/p>\n<\/td>\n \n 1.142%<\/span><\/p>\n<\/td>\n \n 21.60%<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/span><\/b><\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 2G<\/span><\/b><\/p>\n Ekta Copy Industries manufactures different sizes of diaries. The following data is related to four brands diaries on first week of January (amount in <\/span>$<\/span>\/\u20b9\/Rs):<\/span><\/p>\n\n\n\n\n\n\n\n\n \n Particulars <\/span><\/p>\n<\/td>\n \n A<\/span><\/p>\n<\/td>\n \n B<\/span><\/p>\n<\/td>\n \n C<\/span><\/p>\n<\/td>\n \n D<\/span><\/p>\n<\/td>\n<\/tr>\n \n Output in units <\/span><\/p>\n<\/td>\n \n 500<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 600<\/span><\/p>\n<\/td>\n \n 7,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Paper cost per unit (direct materials)<\/span><\/p>\n<\/td>\n \n $5<\/span><\/p>\n<\/td>\n \n $5<\/span><\/p>\n<\/td>\n \n $16<\/span><\/p>\n<\/td>\n \n $17<\/span><\/p>\n<\/td>\n<\/tr>\n \n DLH per unit <\/span><\/p>\n<\/td>\n \n 0.5<\/span><\/p>\n<\/td>\n \n 0.5<\/span><\/p>\n<\/td>\n \n 2<\/span><\/p>\n<\/td>\n \n 1.5<\/span><\/p>\n<\/td>\n<\/tr>\n \n Machine hours per unit <\/span><\/p>\n<\/td>\n \n 0.25<\/span><\/p>\n<\/td>\n \n 0.25<\/span><\/p>\n<\/td>\n \n 1<\/span><\/p>\n<\/td>\n \n 1.5<\/span><\/p>\n<\/td>\n<\/tr>\n \n Labour cost per unit <\/span><\/p>\n<\/td>\n \n $6<\/span><\/p>\n<\/td>\n \n $6<\/span><\/p>\n<\/td>\n \n $6<\/span><\/p>\n<\/td>\n \n $6<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Total production overhead by account department as under (amount in <\/span>$<\/span>\/\u20b9\/Rs):<\/span><\/p>\n\n\n\n\n\n\n\n \n Machine expenses <\/span><\/p>\n<\/td>\n \n 37,425<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Set up cost<\/span><\/p>\n<\/td>\n \n 4,250<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials ordering cost <\/span><\/p>\n<\/td>\n \n 1,920<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials handling cost <\/span><\/p>\n<\/td>\n \n 10,260<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Production runs <\/span><\/p>\n<\/td>\n \n 8,520<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Cost driver activities:<\/span><\/p>\n\n\n\n\n\n\n\n \n Activities <\/span><\/p>\n<\/td>\n \n A<\/span><\/p>\n<\/td>\n \n B<\/span><\/p>\n<\/td>\n \n C<\/span><\/p>\n<\/td>\n \n D<\/span><\/p>\n<\/td>\n<\/tr>\n \n No of set up<\/span><\/p>\n<\/td>\n \n 1<\/span><\/p>\n<\/td>\n \n 6<\/span><\/p>\n<\/td>\n \n 2<\/span><\/p>\n<\/td>\n \n 8<\/span><\/p>\n<\/td>\n<\/tr>\n \n No. of materials order <\/span><\/p>\n<\/td>\n \n 1<\/span><\/p>\n<\/td>\n \n 4<\/span><\/p>\n<\/td>\n \n 1<\/span><\/p>\n<\/td>\n \n 4<\/span><\/p>\n<\/td>\n<\/tr>\n \n No. of materials handling <\/span><\/p>\n<\/td>\n \n 2<\/span><\/p>\n<\/td>\n \n 10<\/span><\/p>\n<\/td>\n \n 3<\/span><\/p>\n<\/td>\n \n 12<\/span><\/p>\n<\/td>\n<\/tr>\n \n No. of production runs\u00a0 <\/span><\/p>\n<\/td>\n \n 2<\/span><\/p>\n<\/td>\n \n 5<\/span><\/p>\n<\/td>\n \n 1<\/span><\/p>\n<\/td>\n \n 4<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Required: \u00a0\u00a0\u00a0\u00a0 (1) Total cost, cost per unit under Conventional Costing System based machine hours <\/span><\/p>\n (2) Cost driver rate; (3) Total cost, cost per unit under Activity Based Costing. <\/span><\/p>\n [Answers: <\/span><\/i><\/p>\n \n\n\n\n\n\n\n\n\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n A<\/span><\/i><\/p>\n<\/td>\n \n B<\/span><\/i><\/p>\n<\/td>\n \n C<\/span><\/i><\/p>\n<\/td>\n \n D <\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n 1 <\/span><\/i><\/p>\n<\/td>\n \n Total cost <\/span><\/i><\/p>\n<\/td>\n \n 4,625<\/span><\/i><\/p>\n<\/td>\n \n 46,250<\/span><\/i><\/p>\n<\/td>\n \n 19,800<\/span><\/i><\/p>\n<\/td>\n \n 234,500<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n CPU<\/span><\/i><\/p>\n<\/td>\n \n 9.25<\/span><\/i><\/p>\n<\/td>\n \n 9.25<\/span><\/i><\/p>\n<\/td>\n \n 33.00<\/span><\/i><\/p>\n<\/td>\n \n 33.50<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n 2<\/span><\/i><\/p>\n<\/td>\n \n CDR<\/span><\/i><\/p>\n<\/td>\n \n $3; $250; $192; $380; $710<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n 3<\/span><\/i><\/p>\n<\/td>\n \n Total cost <\/span><\/i><\/p>\n<\/td>\n \n 6,997<\/span><\/i><\/p>\n<\/td>\n \n 53,368<\/span><\/i><\/p>\n<\/td>\n \n 21,142<\/span><\/i><\/p>\n<\/td>\n \n 223,668<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n CPU<\/span><\/i><\/p>\n<\/td>\n \n 13.99<\/span><\/i><\/p>\n<\/td>\n \n 10.67<\/span><\/i><\/p>\n<\/td>\n \n 35.24<\/span><\/i><\/p>\n<\/td>\n \n 31.95<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n  <\/p>\n SOLUTION: <\/span><\/b><\/p>\n Given and working note: <\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n \n Machine hour\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 = Output \u00d7 MHPU<\/u><\/span><\/i><\/p>\n<\/td>\n \n Machine hours rate <\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n A<\/span><\/i><\/p>\n<\/td>\n \n = 500 \u00d7 0.25<\/span><\/i><\/p>\n<\/td>\n \n =\u00a0\u00a0\u00a0\u00a0\u00a0 125<\/span><\/i><\/p>\n<\/td>\n \n = Total overhead \u00f7 Total MH<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n B<\/span><\/i><\/p>\n<\/td>\n \n = 5,000 \u00d7 0.25<\/span><\/i><\/p>\n<\/td>\n \n =\u00a0\u00a0 1,250<\/span><\/i><\/p>\n<\/td>\n \n = $62,375 \u00f7 12,475 hours<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n C<\/span><\/i><\/p>\n<\/td>\n \n = 600 \u00d7 1.00<\/span><\/i><\/p>\n<\/td>\n \n =\u00a0\u00a0\u00a0\u00a0\u00a0 600<\/span><\/i><\/p>\n<\/td>\n \n = $5<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n D<\/span><\/i><\/p>\n<\/td>\n \n = 7,000 \u00d7 1.50<\/span><\/i><\/p>\n<\/td>\n \n = 10,500<\/span><\/u><\/i><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0\u00a0 12,475<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Cost Statement under Conventional Costing System<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars <\/span><\/p>\n<\/td>\n \n Products<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0A = 500<\/span><\/p>\n<\/td>\n \n B = 5,000<\/span><\/p>\n<\/td>\n \n C = 600<\/span><\/p>\n<\/td>\n \n D = 7,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct materials [Output \u00d7 MCPU]<\/span><\/p>\n<\/td>\n \n 2,500<\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n 9,600<\/span><\/p>\n<\/td>\n \n 119,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct labour [Output \u00d7 DLHPU \u00d7 $6]<\/span><\/p>\n<\/td>\n \n 1,500<\/span><\/p>\n<\/td>\n \n 15,000<\/span><\/p>\n<\/td>\n \n 7,200<\/span><\/p>\n<\/td>\n \n 63,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Prime cost<\/span><\/p>\n<\/td>\n \n 4,000<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n 16,800<\/span><\/p>\n<\/td>\n \n 182,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Add: Overhead (based on machine\u00a0 hour):<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Machine expenses (MH \u00d7 Machine hour rate)<\/span><\/p>\n<\/td>\n \n 625<\/span><\/p>\n<\/td>\n \n 6,250<\/span><\/p>\n<\/td>\n \n 3,000<\/span><\/p>\n<\/td>\n \n 52,500<\/span><\/p>\n<\/td>\n<\/tr>\n \n Total cost <\/span><\/p>\n<\/td>\n \n $4,625<\/span><\/p>\n<\/td>\n \n $46,250<\/span><\/p>\n<\/td>\n \n $19,800<\/span><\/p>\n<\/td>\n \n $234,500<\/span><\/p>\n<\/td>\n<\/tr>\n \n Output <\/span><\/p>\n<\/td>\n \n 500<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 600<\/span><\/p>\n<\/td>\n \n 7,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cost per units = Total cost \u00f7 Output<\/span><\/p>\n<\/td>\n \n $9.25<\/span><\/p>\n<\/td>\n \n $9.25<\/span><\/p>\n<\/td>\n \n $33.00<\/span><\/p>\n<\/td>\n \n $33.50<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Calculation of Cost Driver Rate<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n \n Activities <\/span><\/p>\n<\/td>\n \n Amount <\/span><\/p>\n<\/td>\n \n Cost Driver (CD)<\/span><\/p>\n<\/td>\n \n Total CD<\/span><\/p>\n<\/td>\n \n CD Rate<\/span><\/p>\n<\/td>\n<\/tr>\n \n 1<\/span><\/p>\n<\/td>\n \n 2<\/span><\/p>\n<\/td>\n \n 3<\/span><\/p>\n<\/td>\n \n 4<\/span><\/p>\n<\/td>\n \n 5\u00a0 = 2 \u00f7\u00a0 4<\/span><\/p>\n<\/td>\n<\/tr>\n \n Machine oriented <\/span><\/p>\n<\/td>\n \n 37,425<\/span><\/p>\n<\/td>\n \n Machine hours <\/span><\/p>\n<\/td>\n \n 12,475<\/span><\/p>\n<\/td>\n \n 3<\/span><\/p>\n<\/td>\n<\/tr>\n \n Set up<\/span><\/p>\n<\/td>\n \n 4,250<\/span><\/p>\n<\/td>\n \n No. of set up<\/span><\/p>\n<\/td>\n \n 17<\/span><\/p>\n<\/td>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 250<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials ordering<\/span><\/p>\n<\/td>\n \n 1,920<\/span><\/p>\n<\/td>\n \n No. of materials order<\/span><\/p>\n<\/td>\n \n 10<\/span><\/p>\n<\/td>\n \n 192<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials handling<\/span><\/p>\n<\/td>\n \n 10,260<\/span><\/p>\n<\/td>\n \n No. of materials handling<\/span><\/p>\n<\/td>\n \n 27<\/span><\/p>\n<\/td>\n \n 380<\/span><\/p>\n<\/td>\n<\/tr>\n \n Production runs\u00a0\u00a0\u00a0 <\/span><\/p>\n<\/td>\n \n 8,520<\/span><\/p>\n<\/td>\n \n No. of production <\/span><\/p>\n<\/td>\n \n 12<\/span><\/p>\n<\/td>\n \n 710<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Working note for total cost driver<\/span><\/p>\n\n\n\n\n\n\n \n No. of set up<\/span><\/p>\n<\/td>\n \n = A+B+C+D<\/span><\/p>\n<\/td>\n \n = 1+6+2+8<\/span><\/p>\n<\/td>\n \n = 17<\/span><\/p>\n<\/td>\n<\/tr>\n \n No. of materials order<\/span><\/p>\n<\/td>\n \n = A+B+C+D<\/span><\/p>\n<\/td>\n \n = 1+4+1+4<\/span><\/p>\n<\/td>\n \n = 10<\/span><\/p>\n<\/td>\n<\/tr>\n \n No. of materials handling<\/span><\/p>\n<\/td>\n \n = A+B+C+D<\/span><\/p>\n<\/td>\n \n = 2+10+3+12<\/span><\/p>\n<\/td>\n \n = 27<\/span><\/p>\n<\/td>\n<\/tr>\n \n No. of production<\/span><\/p>\n<\/td>\n \n = A+B+C+D<\/span><\/p>\n<\/td>\n \n = 2+5+1+4<\/span><\/p>\n<\/td>\n \n = 12<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Cost Statement under Activity Based Cost (ABC)<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars <\/span><\/p>\n<\/td>\n \n Products<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0A= 500<\/span><\/p>\n<\/td>\n \n B =5,000<\/span><\/p>\n<\/td>\n \n C =600<\/span><\/p>\n<\/td>\n \n D= 7,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct materials \u00a0\u00a0\u00a0\u00a0 [Output \u00d7 MCPU]<\/span><\/p>\n<\/td>\n \n 2,500<\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n 9,600<\/span><\/p>\n<\/td>\n \n 119,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Direct labour \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 [Output \u00d7 DLHPU \u00d7 $6]<\/span><\/p>\n<\/td>\n \n 1,500<\/span><\/p>\n<\/td>\n \n 15,000<\/span><\/p>\n<\/td>\n \n 7,200<\/span><\/p>\n<\/td>\n \n 63,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Prime cost<\/span><\/p>\n<\/td>\n \n 4,000<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n 16,800<\/span><\/p>\n<\/td>\n \n 182,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Add: Overhead (based on ABC):<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Machine oriented<\/span><\/p>\n<\/td>\n \n [Machine hours \u00d7 $3]<\/span><\/p>\n<\/td>\n \n 375<\/span><\/p>\n<\/td>\n \n 3,750<\/span><\/p>\n<\/td>\n \n 1,800<\/span><\/p>\n<\/td>\n \n 31,500<\/span><\/p>\n<\/td>\n<\/tr>\n \n Set up<\/span><\/p>\n<\/td>\n \n [No. of set up \u00d7 $250]<\/span><\/p>\n<\/td>\n \n 250<\/span><\/p>\n<\/td>\n \n 1,500<\/span><\/p>\n<\/td>\n \n 500<\/span><\/p>\n<\/td>\n \n 2,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials ordering<\/span><\/p>\n<\/td>\n \n [No. of order \u00d7 $192] <\/span><\/p>\n<\/td>\n \n 192<\/span><\/p>\n<\/td>\n \n 768<\/span><\/p>\n<\/td>\n \n 192<\/span><\/p>\n<\/td>\n \n 768<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials handling<\/span><\/p>\n<\/td>\n \n [No. of materials handling \u00d7 $380]<\/span><\/p>\n<\/td>\n \n 760<\/span><\/p>\n<\/td>\n \n 3,800<\/span><\/p>\n<\/td>\n \n 1,140<\/span><\/p>\n<\/td>\n \n 4,560<\/span><\/p>\n<\/td>\n<\/tr>\n \n Production runs<\/span><\/p>\n<\/td>\n \n [No. of production runs \u00d7 $710]<\/span><\/p>\n<\/td>\n \n 1,420<\/span><\/p>\n<\/td>\n \n 3,550<\/span><\/p>\n<\/td>\n \n 710<\/span><\/p>\n<\/td>\n \n 2,840<\/span><\/p>\n<\/td>\n<\/tr>\n \n Total cost <\/span><\/p>\n<\/td>\n \n $6,997<\/span><\/p>\n<\/td>\n \n $53,368<\/span><\/p>\n<\/td>\n \n $21,142<\/span><\/p>\n<\/td>\n \n $223,668<\/span><\/p>\n<\/td>\n<\/tr>\n \n Output <\/span><\/p>\n<\/td>\n \n 500<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 600<\/span><\/p>\n<\/td>\n \n 7,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cost per units = Total cost \u00f7 Output<\/span><\/p>\n<\/td>\n \n $13.99<\/span><\/p>\n<\/td>\n \n $10.67<\/span><\/p>\n<\/td>\n \n $35.24<\/span><\/p>\n<\/td>\n \n $31.95<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/span><\/b><\/p>\n #####<\/span><\/p>\n\n\n\n \n Problems\u00a0 and\u00a0 Answers\u00a0 of\u00a0 Activity\u00a0 Based\u00a0 Costing <\/span><\/b><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 2A<\/span><\/b><\/p>\n ABC Company (P) Ltd has following information:<\/span><\/p>\n\n\n\n\n\n\n\n\n \n Particulars <\/span>$<\/span>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Products <\/span>\u00ae<\/span><\/p>\n<\/td>\n \n P1<\/span><\/p>\n<\/td>\n \n P2<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n The activity costs are:<\/span><\/p>\n<\/td>\n<\/tr>\n \n Output in units <\/span><\/p>\n<\/td>\n \n 1,000<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Volume related<\/span><\/p>\n<\/td>\n \n $110,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Machine hour per unit <\/span><\/p>\n<\/td>\n \n 2<\/span><\/p>\n<\/td>\n \n 2<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Purchase related<\/span><\/p>\n<\/td>\n \n $120,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n DLH per unit <\/span><\/p>\n<\/td>\n \n 4<\/span><\/p>\n<\/td>\n \n 4<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Set up related<\/u><\/span><\/p>\n<\/td>\n \n $210,000<\/span><\/u><\/p>\n<\/td>\n<\/tr>\n \n No. of purchase order<\/span><\/p>\n<\/td>\n \n 80<\/span><\/p>\n<\/td>\n \n 160<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Total <\/span><\/p>\n<\/td>\n \n $440,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n No. of set ups <\/span><\/p>\n<\/td>\n \n 40<\/span><\/p>\n<\/td>\n \n 60<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Required: (a) Cost driver rate; (b) Total overhead under ABC; <\/span><\/p>\n \u00a0[Answer: (1) $5; $500 and $2,100; <\/span><\/i><\/p>\n (2) $134,000 and $306,000]<\/span><\/i><\/p>\n \u00a0<\/span><\/b><\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 2B<\/span><\/b><\/p>\n Kohinoor Metal Uddhyog manufactures different kind of auto accessories. The following data are related to four specific products:<\/span><\/p>\n\n\n\n\n\n\n\n\n \n Particulars <\/span><\/p>\n<\/td>\n \n A<\/span><\/p>\n<\/td>\n \n B<\/span><\/p>\n<\/td>\n \n C<\/span><\/p>\n<\/td>\n \n D<\/span><\/p>\n<\/td>\n<\/tr>\n \n Output in units <\/span><\/p>\n<\/td>\n \n 500<\/span><\/p>\n<\/td>\n \n 800<\/span><\/p>\n<\/td>\n \n 1,000<\/span><\/p>\n<\/td>\n \n 1,500<\/span><\/p>\n<\/td>\n<\/tr>\n \n Prime cost <\/span><\/p>\n<\/td>\n \n $48,000<\/span><\/p>\n<\/td>\n \n $80,000<\/span><\/p>\n<\/td>\n \n $86,000<\/span><\/p>\n<\/td>\n \n $120,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Machine hour per unit <\/span><\/p>\n<\/td>\n \n 4<\/span><\/p>\n<\/td>\n \n 6<\/span><\/p>\n<\/td>\n \n 4<\/span><\/p>\n<\/td>\n \n 6<\/span><\/p>\n<\/td>\n<\/tr>\n \n No. of production runs<\/span><\/p>\n<\/td>\n \n 5<\/span><\/p>\n<\/td>\n \n 7<\/span><\/p>\n<\/td>\n \n 8<\/span><\/p>\n<\/td>\n \n 10<\/span><\/p>\n<\/td>\n<\/tr>\n \n No. of dispatch <\/span><\/p>\n<\/td>\n \n 10<\/span><\/p>\n<\/td>\n \n 8<\/span><\/p>\n<\/td>\n \n 12<\/span><\/p>\n<\/td>\n \n 15<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Further information:<\/span><\/p>\n\n\n\n\n\n\n \n Short term variable cost:<\/span><\/p>\n<\/td>\n \n Machine production<\/span><\/p>\n<\/td>\n \n $99,000<\/span><\/p>\n<\/td>\n \n Machine hour <\/span><\/p>\n<\/td>\n<\/tr>\n \n Long term variable cost:<\/span><\/p>\n<\/td>\n \n Schedule cost<\/span><\/p>\n<\/td>\n \n $165,000<\/span><\/p>\n<\/td>\n \n Production runs<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Set up cost<\/span><\/p>\n<\/td>\n \n $96,000<\/span><\/p>\n<\/td>\n \n Production runs<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Dispatch of goods<\/span><\/p>\n<\/td>\n \n $137,700<\/span><\/p>\n<\/td>\n \n No. of dispatch<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Required: \u00a0\u00a0\u00a0\u00a0 (1) Cost driver rate; (2) Total overhead under activity based costing; (3) Cost per unit under ABC <\/span><\/p>\n [Answer: (1) $5; $5,500; $3,200 and $3,060; <\/span><\/i><\/p>\n (2) $132,100; $189,360; $212,320 and $297,900; <\/span><\/i><\/p>\n (3) $264.20; $236.73; $212.32 and $198.60]<\/span><\/i><\/p>\n \u00a0<\/span><\/b><\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 2C<\/span><\/b><\/p>\n Birat Shoes Company has got order for three sizes shoes. Other information is: <\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars <\/span>$<\/span><\/p>\n<\/td>\n \n Products <\/span>\u00ae<\/span><\/p>\n<\/td>\n \n M<\/span><\/p>\n<\/td>\n \n N<\/span><\/p>\n<\/td>\n \n O<\/span><\/p>\n<\/td>\n<\/tr>\n \n Output units <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 420<\/span><\/p>\n<\/td>\n \n 280<\/span><\/p>\n<\/td>\n \n 560<\/span><\/p>\n<\/td>\n<\/tr>\n \n Standard usage of raw materials <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 2<\/span><\/p>\n<\/td>\n \n 4<\/span><\/p>\n<\/td>\n \n 3<\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials cost per unit<\/span><\/p>\n<\/td>\n \n (in $)<\/span><\/p>\n<\/td>\n \n $25<\/span><\/p>\n<\/td>\n \n $15<\/span><\/p>\n<\/td>\n \n $10<\/span><\/p>\n<\/td>\n<\/tr>\n \n DLH per unit <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 2.5<\/span><\/p>\n<\/td>\n \n 2.0<\/span><\/p>\n<\/td>\n \n 1.5<\/span><\/p>\n<\/td>\n<\/tr>\n \n Machine hour per unit<\/span><\/p>\n<\/td>\n \n (hours)<\/span><\/p>\n<\/td>\n \n 5<\/span><\/p>\n<\/td>\n \n 4<\/span><\/p>\n<\/td>\n \n 3<\/span><\/p>\n<\/td>\n<\/tr>\n \n Selling price per unit<\/span><\/p>\n<\/td>\n \n (in $)<\/span><\/p>\n<\/td>\n \n $430<\/span><\/p>\n<\/td>\n \n $400<\/span><\/p>\n<\/td>\n \n $300<\/span><\/p>\n<\/td>\n<\/tr>\n \n Production runs <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 6<\/span><\/p>\n<\/td>\n \n 4<\/span><\/p>\n<\/td>\n \n 8<\/span><\/p>\n<\/td>\n<\/tr>\n \n Order executed <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 21<\/span><\/p>\n<\/td>\n \n 14<\/span><\/p>\n<\/td>\n \n 28<\/span><\/p>\n<\/td>\n<\/tr>\n \n Requisition raised <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 10<\/span><\/p>\n<\/td>\n \n 15<\/span><\/p>\n<\/td>\n \n 20<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n DLH $10 per labour hour <\/span><\/p>\n \u00a0<\/span><\/p>\n Cost driver and expenses:<\/span><\/p>\n\n\n\n\n\n\n\n\n\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Cost driver <\/span><\/p>\n<\/td>\n<\/tr>\n \n Volume related cost<\/span><\/p>\n<\/td>\n \n 36,750<\/span><\/p>\n<\/td>\n \n Machine hour <\/span><\/p>\n<\/td>\n<\/tr>\n \n Set up cost<\/span><\/p>\n<\/td>\n \n 101,430<\/span><\/p>\n<\/td>\n \n No. of production runs<\/span><\/p>\n<\/td>\n<\/tr>\n \n Store receiving cost <\/span><\/p>\n<\/td>\n \n 79,785<\/span><\/p>\n<\/td>\n \n No. of requisition raised <\/span><\/p>\n<\/td>\n<\/tr>\n \n Quantity control cost <\/span><\/p>\n<\/td>\n \n 36,000<\/span><\/p>\n<\/td>\n \n No. of production runs <\/span><\/p>\n<\/td>\n<\/tr>\n \n Materials handling and dispatch <\/span><\/p>\n<\/td>\n \n 97,650<\/span><\/p>\n<\/td>\n \n No. of order executive <\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n $351,615<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Required: (a) Total cost and cost per unit under conventional costing based on labour hour rate<\/span><\/p>\n (b) Cost driver rate; (c) Total cost and cost per unit under ABC<\/span><\/p>\n [Answer: (a) M = $182,196 and $433.80; <\/span><\/i><\/p>\n N = $102,771 and $367.04; O = $145,757 and $260.28;<\/span><\/i><\/p>\n (b) $7.5; $5,635; $1,773; $2,000 and $1,550;<\/span><\/i><\/p>\n (c) M = $143,340 and $341.29; N = $109,635 and $391.55; <\/span><\/i><\/p>\n O = $177,740 and $317.39]<\/span><\/i><\/p>\n \u00a0<\/span><\/b><\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 2D\u00a0<\/span><\/b><\/p>\n AP Manufacturing Company has a single production process. Three products P, Q and Rare produced by workers the wage rate per hour is $4. The budget information has been obtained for the year is as follows:<\/span><\/p>\n\n\n\n\n\n\n\n \n Product<\/span><\/p>\n<\/td>\n \n Production\u00a0 units<\/span><\/p>\n<\/td>\n \n Material<\/span><\/p>\n<\/td>\n \n Materials\u00a0 cost<\/span><\/p>\n<\/td>\n \n Labour hours<\/span><\/p>\n<\/td>\n \n Machine hours<\/span><\/p>\n<\/td>\n \n Batches<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Per unit<\/span><\/p>\n<\/td>\n \n Per unit<\/span><\/p>\n<\/td>\n \n Per unit<\/span><\/p>\n<\/td>\n \n Per unit<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n P<\/span><\/p>\n<\/td>\n \n 2,000<\/span><\/p>\n<\/td>\n \n 2 units<\/span><\/p>\n<\/td>\n \n $3<\/span><\/p>\n<\/td>\n \n 0.50 hour<\/span><\/p>\n<\/td>\n \n 1.00 hour<\/span><\/p>\n<\/td>\n \n 6<\/span><\/p>\n<\/td>\n<\/tr>\n \n Q<\/span><\/p>\n<\/td>\n \n 1,000<\/span><\/p>\n<\/td>\n \n 3 units<\/span><\/p>\n<\/td>\n \n $5<\/span><\/p>\n<\/td>\n \n 0.25 hour<\/span><\/p>\n<\/td>\n \n 0.25 hour<\/span><\/p>\n<\/td>\n \n 5<\/span><\/p>\n<\/td>\n<\/tr>\n \n R<\/span><\/p>\n<\/td>\n \n 500<\/span><\/p>\n<\/td>\n \n 4 units<\/span><\/p>\n<\/td>\n \n $2<\/span><\/p>\n<\/td>\n \n 1.00 hour<\/span><\/p>\n<\/td>\n \n 1.50 hour<\/span><\/p>\n<\/td>\n \n 4<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n The overhead cost and related cost drives are:<\/span><\/p>\n\n\n\n\n\n\n \n Overhead<\/span><\/p>\n<\/td>\n \n Cost Drives<\/span><\/p>\n<\/td>\n \n Amount (in $)<\/span><\/p>\n<\/td>\n<\/tr>\n \n Material receipt and inspections<\/span><\/p>\n<\/td>\n \n No of batches<\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Material handing<\/span><\/p>\n<\/td>\n \n Quantity of materials<\/span><\/p>\n<\/td>\n \n 18,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Short term variable cost<\/span><\/p>\n<\/td>\n \n No of machine hours<\/span><\/p>\n<\/td>\n \n 6,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Required: Using activity based costing find out: (1) Cost driver rate; (2) Total cost for each product; (3) Cost per unit<\/span><\/p>\n Answers: (1) CDR = $2,000; $2; $2; <\/span><\/i><\/p>\n (2) Total cost = $34,000; $22,500; $16,500; <\/span><\/i><\/p>\n (3) $17; $22.50; $33]<\/span><\/i><\/p>\n Materials per unit is applied for Quantity not for direct materials<\/span><\/i><\/p>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 2E<\/span><\/b><\/p>\n ABC Company manufactures two products namely X and Y. Data for the period is as follows:<\/span><\/p>\n\n\n\n\n\n\n\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Product X<\/span><\/p>\n<\/td>\n \n Product Y<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Output in units<\/span><\/p>\n<\/td>\n \n 2,000<\/span><\/p>\n<\/td>\n \n 3,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Machine hour unit<\/span><\/p>\n<\/td>\n \n 2 hours<\/span><\/p>\n<\/td>\n \n 1 hour<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Labour hour per unit<\/span><\/p>\n<\/td>\n \n 2 hours<\/span><\/p>\n<\/td>\n \n 3 hours<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Production run<\/span><\/p>\n<\/td>\n \n 7<\/span><\/p>\n<\/td>\n \n 3<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Total production overhead recorded and cost-driver fixed by cost accounting department is analyzed as:<\/span><\/p>\n\n\n\n\n\n\n \n Cost<\/span><\/p>\n<\/td>\n \n Cost Drives<\/span><\/p>\n<\/td>\n \n Amount\u00a0 ($)<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Set up cost<\/span><\/p>\n<\/td>\n \n Production runs<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Machine department<\/span><\/p>\n<\/td>\n \n Machine hours<\/span><\/p>\n<\/td>\n \n 14,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Scheduling\u00a0 cost<\/span><\/p>\n<\/td>\n \n Production runs<\/span><\/p>\n<\/td>\n \n 18,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Required: (a) Total overhead and overhead rate by using labour hour rate; (b) Cost driver rate<\/span><\/p>\n (c) Total overhead and overhead rate under activity based costing<\/span><\/p>\n Answer: (1) Total overhead: X = $16,000; Y = $36,000; <\/span><\/i><\/p>\n ORPU:\u00a0 X = $8.00, Y= $12.00;<\/span><\/i><\/p>\n (2) Total overhead: X = $34,600; Y = $17,400; <\/span><\/i><\/p>\n ORPU: X = $17.30, Y = $5.80;<\/span><\/i><\/p>\n \u00a0<\/span><\/b><\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 2F<\/span><\/b><\/p>\n A Company produces two types of products. The president of the company recently decided to change from a volume based costing system to an activity based cost system. To assess the effect of the change, the following data have been gathered:<\/span><\/p>\n\n\n\n\n\n \n Products<\/span><\/p>\n<\/td>\n \n Units<\/span><\/p>\n<\/td>\n \n Machine hours<\/span><\/p>\n<\/td>\n \n Production runs<\/span><\/p>\n<\/td>\n \n Prime cost<\/span><\/p>\n<\/td>\n \n Material component<\/span><\/p>\n<\/td>\n<\/tr>\n \n A<\/span><\/p>\n B<\/span><\/p>\n<\/td>\n \n 3,000<\/span><\/p>\n 2,000<\/span><\/p>\n<\/td>\n \n 9,000<\/span><\/p>\n 4,000<\/span><\/p>\n<\/td>\n \n 10<\/span><\/p>\n 5<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n 8,000<\/span><\/p>\n<\/td>\n \n 6,000<\/span><\/p>\n 8,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Total <\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 13,000<\/span><\/p>\n<\/td>\n \n 15<\/span><\/p>\n<\/td>\n \n 18,000<\/span><\/p>\n<\/td>\n \n 14,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n The overhead cost and cost drives are as follows:<\/span><\/p>\n\n\n\n\n\n\n \n Cost<\/span><\/p>\n<\/td>\n \n Cost drives<\/span><\/p>\n<\/td>\n \n Amount ($)<\/span><\/p>\n<\/td>\n<\/tr>\n \n Machine related activities<\/span><\/p>\n<\/td>\n \n Machine hours<\/span><\/p>\n<\/td>\n \n 39,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Set up cost<\/span><\/p>\n<\/td>\n \n Production runs<\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Material handling costs<\/span><\/p>\n<\/td>\n \n No. of material components<\/span><\/p>\n<\/td>\n \n 28,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Required: \u00a0\u00a0\u00a0\u00a0 (1) Cost drives rate for each item by using activity- based costing\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/p>\n (2) Total cost and cost per unit of each product by using cost- driver rate<\/span><\/p>\n [Answer: (1) Cost driver rate = $3, $2,000, $2;\u00a0\u00a0 <\/span><\/i><\/p>\n (2) Total cost: A = $69,000; B = $46,000; <\/span><\/i><\/p>\n OPU: A = $23; B = $23;<\/span><\/i><\/p>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/span><\/b><\/p>\n ***** EP <\/span>Online <\/span>Study *****<\/span><\/p>\n Thank you for investing your time.<\/span><\/i><\/p>\n Please comment on the article.<\/span><\/i><\/p>\n You can help us by sharing this post on your social media platform.<\/span><\/i><\/p>\n \u00a0<\/span><\/p>\n Jay G<\/span>o<\/span>o<\/span>g<\/span>l<\/span>e<\/span>, Jay YouTube<\/span>, Jay Social Media<\/span><\/span><\/p>\n \u091c\u092f<\/span> \u0917\u0942<\/span>\u0917<\/span>\u0932<\/span>.<\/span> \u091c\u092f<\/span> \u092f\u0941\u091f\u094d\u092f\u0941\u092c<\/span>,<\/span> \u091c\u092f<\/span> \u0938\u094b\u0936\u0932<\/span> \u092e\u0940\u0921\u093f\u092f\u093e <\/span><\/p>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/span><\/b><\/p>\n","protected":false},"excerpt":{"rendered":" \u00a0 \u00a0 \u00a0 Activity Based Costing | Concept of ABC Direct materials and direct labour are the major elements of traditional cost accounting system. The traditional system is suitable for those companies who produce goods in narrow range. If company produces wide range of goods, overhead cost will be relatively higher to the direct cost. […]<\/p>\n","protected":false},"author":19997,"featured_media":5956,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2917,2306,11],"tags":[2949,2953,2954,2952,2955],"writers":[144],"yoast_head":"\n