20. CASA Ltd, manufactures 3 types of biscuits, A, B and C in a fully mechanised facton The company has been following conventional method of costing and wishes to sh to Activity Based Costing System and therefore wishes to have the following date presented under both the system for the month. Inspection Cost * per month 73,000 Machine-Repairs and Maintenance * per month 1,42,000 Dye Cost * per month 10,250 Selling Overheads * per month 1,62,000 Product A B. Prime Cost ( Per Unit) 12 6. 8. Selling price (* per Unit) 18 14 12 Gross Production (Unit/production run) 2520 2810 3010 Number of defective units/production run 20 10 10 Inspection (No. of hours/production run) Dye Cost/Production run (?) 200 300 250 No. of Machine hours/production run 20 12 30 Sales - No. of units /month 25,000 56,000 27,000 Additional Information: (a) No accumulation of inventory is considered (b) All good units produced are sold (c) All manufacturing and selling overheads are conventionally allocated on the basis of units sold (d) Product A needs no advertisement. Due to its nutritive value, it is readily consumed by diabetic patients of a hospital. Advertisement cost included in the total selling overhead is ? 83,000. (0) Product B needs to be specially packed before being sold so that it moo competition. 54,000 was the amount spent for the month in specially packing and this has been included in the total selling overhead cost given. You ard required to present product wise profitability statements under the conventional system and ABC system and accordingly rank the producte. 4.
20. CASA Ltd, manufactures 3 types of biscuits, A, B and C in a fully mechanised facton The company has been following conventional method of costing and wishes to sh to Activity Based Costing System and therefore wishes to have the following date presented under both the system for the month. Inspection Cost * per month 73,000 Machine-Repairs and Maintenance * per month 1,42,000 Dye Cost * per month 10,250 Selling Overheads * per month 1,62,000 Product A B. Prime Cost ( Per Unit) 12 6. 8. Selling price (* per Unit) 18 14 12 Gross Production (Unit/production run) 2520 2810 3010 Number of defective units/production run 20 10 10 Inspection (No. of hours/production run) Dye Cost/Production run (?) 200 300 250 No. of Machine hours/production run 20 12 30 Sales - No. of units /month 25,000 56,000 27,000 Additional Information: (a) No accumulation of inventory is considered (b) All good units produced are sold (c) All manufacturing and selling overheads are conventionally allocated on the basis of units sold (d) Product A needs no advertisement. Due to its nutritive value, it is readily consumed by diabetic patients of a hospital. Advertisement cost included in the total selling overhead is ? 83,000. (0) Product B needs to be specially packed before being sold so that it moo competition. 54,000 was the amount spent for the month in specially packing and this has been included in the total selling overhead cost given. You ard required to present product wise profitability statements under the conventional system and ABC system and accordingly rank the producte. 4.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
Transcribed Image Text:20. CASA Ltd. manufactures 3 types of biscuits, A, B and C in a fully mechanised facton
The company has been following conventional method of costing and wishes to eb
to Activity Based Costing System and therefore wishes to have the following date
presented under both the system for the month.
Inspection Cost
* per month
73,000
Machine-Repairs and Maintenance
* per month
1,42,000
Dye Cost
* per month
10,250
Selling Overheads
* per month
1,62,000
Product
A
B
C
Prime Cost ( Per Unit)
12
9.
8
Selling price ( per Unit)
18
14
12
Gross Production (Unit/production run)
2520
2810
3010
Number of defective units/production run
20
10
10
Inspection (No. of hours/production run)
4
4
Dye Cost/Production run (?)
200
300
250
No. of Machine hours/production run
20
12
30
Sales - No. of units /month
25,000
56,000
27,000
Additional Information:
(a) No accumulation of inventory is considered
(b) All good units produced are sold
(c) All manufacturing and selling overheads are conventionally allocated on the basis
of units sold
(d) Product A needs no advertisement. Due to its nutritive value, it is readily
consumed by diabetic patients of a hospital. Advertisement cost included in rhe
total selling overhead is ? 83,000.
(e) Product B needs to be specially packed before being sold so that it meeis
competition. ? 54,000 was the amount spent for the month in specially packing
and this has been included in the total selling overhead cost given. You are
required to present product wise profitability statements under the convenicna
system and ABC system and accordingly rank the products-
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