Asteroid produces and sells mountain bikes and has four keys products. this year, for the first time,it is operating an activity based costing system in parallel with its long-standing traditional costing system (which absorbs overheads on a machine hour basis). the planned production activity-based cost pools and cost driver activity levels for all the output for the year are as follow: Activity Cost Pool Activity Level Purchasing materials 750.000 5000 purchase orders Storing materials 800.000 1600 issue notes Setting up machinery 600.000 600 set-ups Running machinery 990.000 10.000 machine hours Total production overheads 3140.000 An analysis of actual production output for its two star products shows the following figures: Activity Tour Giro Units produced 1500 800 Purchase orders 1500 500 Store issue notes 800 400 Set-ups 235 100 Machine Hours 4000 3000 furthermore, cost in euro for direct material and hour for these two models are as follow: Tour Giro Direct materials costs 150.000euro 60.000 euro Direct Labour costs 700.000euro 110.500 euro Calculate the total production cost of both products ‘Tour’ and ‘Giro; using: a. Traditional costing system approach b. Activity based costing approach
Asteroid produces and sells mountain bikes and has four keys products. this year, for the first time,it is operating an activity based costing system in parallel with its long-standing traditional costing system (which absorbs overheads on a machine hour basis). the planned production activity-based cost pools and cost driver activity levels for all the output for the year are as follow: Activity Cost Pool Activity Level Purchasing materials 750.000 5000 purchase orders Storing materials 800.000 1600 issue notes Setting up machinery 600.000 600 set-ups Running machinery 990.000 10.000 machine hours Total production overheads 3140.000 An analysis of actual production output for its two star products shows the following figures: Activity Tour Giro Units produced 1500 800 Purchase orders 1500 500 Store issue notes 800 400 Set-ups 235 100 Machine Hours 4000 3000 furthermore, cost in euro for direct material and hour for these two models are as follow: Tour Giro Direct materials costs 150.000euro 60.000 euro Direct Labour costs 700.000euro 110.500 euro Calculate the total production cost of both products ‘Tour’ and ‘Giro; using: a. Traditional costing system approach b. Activity based costing approach
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Asteroid produces and sells mountain bikes and has four keys products. this year, for the first time,it is operating an activity based costing system in parallel with its long-standing traditional costing system (which absorbs
| Activity | Cost Pool | Activity Level |
| Purchasing materials | 750.000 | 5000 purchase orders |
| Storing materials | 800.000 | 1600 issue notes |
| Setting up machinery | 600.000 | 600 set-ups |
| Running machinery | 990.000 | 10.000 machine hours |
| Total production overheads | 3140.000 |
An analysis of actual production output for its two star products shows the following figures:
| Activity | Tour | Giro |
| Units produced | 1500 | 800 |
| Purchase orders | 1500 | 500 |
| Store issue notes | 800 | 400 |
| Set-ups | 235 | 100 |
| Machine Hours | 4000 | 3000 |
furthermore, cost in euro for direct material and hour for these two models are as follow:
| Tour | Giro | |
| Direct materials costs | 150.000euro | 60.000 euro |
| Direct Labour costs | 700.000euro | 110.500 euro |
Calculate the total production cost of both products ‘Tour’ and ‘Giro; using:
a. Traditional costing system approach
b. Activity based costing approach
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