Determine the selling price of a single cardboard paper, plain white paper and blue margin paperusing the type of costing system that the company uses. Consider the following information by WriteUps Limited, a company that manufactures cardboardpaper, plain white paper and blue margin paper.WriteUps Limited uses an Activity-Based Costing System in allocating overhead costs to the variouspaper products it manufactures. The following table was given to you by your costing clerk:Prime costs and usage per pad of the productCardboardPlain WhiteBlue MarginCost per hour orkgMachine hours6 minutes3 minutes5 minutesR 75Labour hours12 minutes5 minutes10 minutesR 60Paper Pulp750 grams250 grams300 gramsR 25Overhead costs are allocated amongst four department: Production department Alpha, Productiondepartment Omega, the Packaging Service department and the Maintenance Service department.Production department Alpha is machine intensive and Production department Omega is labourintensive. Another costing clerk has prepared the following table for you:Cost PoolsCardboardPlain WhiteBlue MarginTotalAlphaOmegaR640 000R1 250 000Packing of OrdersR350 000Maintenance??R840 000Cost Drivers and ProductionCardboardPlain WhiteBlue MarginTotalMaintenance hours3 0001 0002 0006 000Orders of paper1 5501 900300750500Quality Control500800600checksProduction (exam130 000240 000180 000550 000pads)Labour hours18 00033 00025 00076 000Machine hours10 00018 00012 00040 000 Sales DataCardboardPlain WhiteBlue MarginMark-up on cost15%25%20%Competitors pricesR46.26R26.12R36.50

working notes We got figures of alpha using 10:18:12 ratio And omega 18:33:25 And packing order…

Answered: Determine the selling price of a single…

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.

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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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

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.

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

Sales Data
Cardboard
Plain White
Blue Margin
Mark-up on cost
15%
25%
20%
Competitors prices
R46.26
R26.12
R36.50

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