Consider the following information by WriteUps Limited, a company that manufactures cardboard paper, plain white paper and blue margin paper. WriteUps Limited uses an Activity-Based Costing System in allocating overhead costs to the various paper products it manufactures. The following table was given to you by your costing clerk: Prime costs and usage per pad of the product Cardboard Plain White Blue Margin Cost per hour or kg Machine hours 6 minutes 3 minutes 5 minutes R75 Labour hours 12 minutes 5 minutes 10 minutes R60 Paper Pulp 750 grams 250 grams 300 grams R25 Overhead costs are allocated amongst four department: Production department Alpha, Production department Omega, the Packaging Service department and the Maintenance Service department. Production department Alpha is machine intensive and Production department Omega is labour intensive. Another costing clerk has prepared the following table for you: Cost Pools Cardboard Plain White Blue Margin Total Alpha ? ? ? R 640 000 Omega ? ? ? R 1 250 000 Packing of orders ? ? ? R 350 000 Maintenance ? ? ? R 840 000 Cost drivers and production Cardboard Plain White Blue Margin Total Maintenance hours 3000 1000 2000 6000 Orders of paper 300 750 500 1550 Quality control checks 500 800 600 1900 Production (exam pads) 130000 240000 180000 550000 Labour hours 18000 33000 25000 76000 Machine hours 10000 18000 12000 40000 Sales data Cardboard Plain White Blue Margin Mark-up cost 15% 25% 20% Competitors price R46.26 R26.12 R36.50 1. Calculate the prime cost of single cardboard paper, plain white paper and blue margin paper. 2. Determine the selling price of a single cardboard paper, plain white paper and blue margin paper using the type of costing system that the company uses. 3. Based on your calculations prepare in question 2, is there anything that you would conclude about your calculations and compared to the data given?
Consider the following information by WriteUps Limited, a company that manufactures cardboard
paper, plain white paper and blue margin paper.
WriteUps Limited uses an Activity-Based Costing System in allocating
paper products it manufactures. The following table was given to you by your costing clerk:
|
Prime costs and usage per pad of the product |
||||||||||||||||||||
|
Overhead costs are allocated amongst four department: Production department Alpha, Production
department Omega, the Packaging Service department and the Maintenance Service department.
Production department Alpha is machine intensive and Production department Omega is labour
intensive. Another costing clerk has prepared the following table for you:
Cost Pools
|
|
Cardboard |
Plain White |
Blue Margin |
Total |
|
Alpha |
? |
? |
? |
R 640 000 |
|
Omega |
? |
? |
? |
R 1 250 000 |
|
Packing of orders |
? |
? |
? |
R 350 000 |
|
Maintenance |
? |
? |
? |
R 840 000 |
Cost drivers and production
|
|
Cardboard |
Plain White |
Blue Margin |
Total |
|
Maintenance hours |
3000 |
1000 |
2000 |
6000 |
|
Orders of paper |
300 |
750 |
500 |
1550 |
|
Quality control checks |
500 |
800 |
600 |
1900 |
|
Production (exam pads) |
130000 |
240000 |
180000 |
550000 |
|
Labour hours |
18000 |
33000 |
25000 |
76000 |
|
Machine hours |
10000 |
18000 |
12000 |
40000 |
Sales data
|
|
Cardboard |
Plain White |
Blue Margin |
|
|
Mark-up cost |
15% |
25% |
20% |
|
|
Competitors price |
R46.26 |
R26.12 |
R36.50 |
|
1. Calculate the prime cost of single cardboard paper, plain white paper and blue margin
paper.
2. Determine the selling price of a single cardboard paper, plain white paper and blue margin paper
using the type of costing system that the company uses.
3. Based on your calculations prepare in question 2, is there anything that you would conclude
about your calculations and compared to the data given?
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