Acton Acton makes and sells three products and has budgeted production overheads as follows for next year: £Set ups784,000Materials handling338,800Inspection540,400Total1,663,200 Details of the three products are as follows: FeFi FoBudget (units)10,00016,00018,000Production run size100200300Set-ups per batch4612Material requisitions16,53020,93817,632Inspections1,1881,7822,430 Required:Calculate the production overhead per unit for each product using activity based costing.

Under Activity based costing the overhead are allocated on basis of cost drivers.

Answered: Acton makes and sells three products…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Acton

Acton makes and sells three products and has budgeted production overheads as follows for next year:

	£
Set ups	784,000
Materials handling	338,800
Inspection	540,400
Total	1,663,200

Details of the three products are as follows:

	Fe	Fi	Fo
Budget (units)	10,000	16,000	18,000
Production run size	100	200	300
Set-ups per batch	4	6	12
Material requisitions	16,530	20,938	17,632
Inspections	1,188	1,782	2,430

Required:

Calculate the production overhead per unit for each product using activity based costing.

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