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 R 75 Machine hours 6 minutes 3 minutes 5 minutes Labour hours 12 minutes 5 minutes 10 minutes R 60 Paper Pulp 750 grams 250 grams 300 grams R 25 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 Omega Packing of Orders R640 000 ? R1 250 000 ? ? R350 000 Maintenance ? ? R840 000 Cost Drivers and Production Cardboard Plain White Blue Margin Total 1 000 6 000 1 550 Maintenance hours 3 000 2 000 Orders of paper 300 750 500 Quality Control 500 800 600 1 900 checks Production (exam 130 000 240 000 180 000 550 000 pads) Labour hours 18 000 33 000 25 000 76 000 Machine hours 10 000 18 000 12 000 40 000
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 R 75 Machine hours 6 minutes 3 minutes 5 minutes Labour hours 12 minutes 5 minutes 10 minutes R 60 Paper Pulp 750 grams 250 grams 300 grams R 25 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 Omega Packing of Orders R640 000 ? R1 250 000 ? ? R350 000 Maintenance ? ? R840 000 Cost Drivers and Production Cardboard Plain White Blue Margin Total 1 000 6 000 1 550 Maintenance hours 3 000 2 000 Orders of paper 300 750 500 Quality Control 500 800 600 1 900 checks Production (exam 130 000 240 000 180 000 550 000 pads) Labour hours 18 000 33 000 25 000 76 000 Machine hours 10 000 18 000 12 000 40 000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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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Answer to question 2 is below
| Card board | plain white | blue margin | total | |
| Alpha | 160,000 | 288,000 | 192,000 | 640,000 |
| Omega | 296,053 | 542,763 | 411,184 | 1,250,000 |
| Packing order | 67,742 | 169,355 | 112,903 | 350,000 |
| Maintenance | 420,000 |
140,000 |
280,000 | 840,000 |
| total |
943,795 | 1140,118 | 996,087 |
Step 3
| Card board | plain white | blue margin | |
| Overhead cost per unit | 7.3 | 4.8 | 5.5 |
| Direct machine cost | 7.5 | 3.75 | 6.25 |
| Direct labour cost | 12 | 5 | 10 |
| Paper pulp | 18.75 | 6.25 | 7.5 |
| total cost | 45.55 | 19.8 | 29.25 |
| Profit | 6.8 | 4.95 | 5.85 |
| price per unit | 52.3 | 24.75 | 35.1 |
Based on your calculations prepare in question 2, is there anything that you would conclude
about your calculations and compared to the data given?
Transcribed Image Text:Sales Data
Cardboard
Plain White
Blue Margin
Mark-up on cost
15%
25%
20%
Competitors prices
R46.26
R26.12
R36.50
Transcribed Image Text: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
R 75
Labour hours
12 minutes
5 minutes
10 minutes
R 60
Paper Pulp
750 grams
250 grams
300 grams
R 25
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
Omega
R640 000
R1 250 000
Packing of Orders
R350 000
Maintenance
?
?
R840 000
Cost Drivers and Production
Cardboard
Plain White
Blue Margin
Total
Maintenance hours
3 000
1 000
2 000
6 000
Orders of paper
1 550
1 900
300
750
500
Quality Control
500
800
600
checks
Production (exam
130 000
240 000
180 000
550 000
pads)
Labour hours
18 000
33 000
25 000
76 000
Machine hours
10 000
18 000
12 000
40 000
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