Kingston Industries manufactures two types of computerized scoreboards, custom and standard, each of which involves three manufacturing processes, namely: cutting, assembly and packaging. The company uses an activity-based costing system to allocate its overhead cost to the manufacturing processes. In using the activity-based costing system, the company uses four overhead activities; production set-up, procurement, quality control and materials management, in each production department. An activity analysis of the overhead related to the cutting department revealed the following estimated costs and activity bases for the four overhead activities: Activity Costs Activity Base  $ Production set-up 43 200 Number of set-ups Procurement 156 000 Number of purchase orders Quality control 175 000 Number of ins

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Kingston Industries manufactures two types of computerized scoreboards, custom and standard,
each of which involves three manufacturing processes, namely: cutting, assembly and packaging.
The company uses an activity-based costing system to allocate its overhead cost to the
manufacturing processes.
In using the activity-based costing system, the company uses four overhead activities; production
set-up, procurement, quality control and materials management, in each production department.
An activity analysis of the overhead related to the cutting department revealed the following
estimated costs and activity bases for the four overhead activities:
Activity Costs Activity Base
 $
Production set-up 43 200 Number of set-ups
Procurement 156 000 Number of purchase orders
Quality control 175 000 Number of inspections
Materials management 150 000 Number of components
Total 524 200
The activity based usage quantities for each product in the cutting department are as follows:


                 Set-ups    PurchaseOrders      Inspections    Components    Unit Volume
Custom        400          1000                           2000           300                5000
Standard       80           200                              500            100               5000
Total            480          1200                            2500            400             10000
(i) Determine an activity rate for each activity. 
(ii) Calculate the total overhead cost assigned to each product in the cutting department
using the rates computed in part (i). 
(iii) Determine the unit activity (overhead) cost for each product in the cutting
department. 
(iv) Identify TWO other methods of costing manufactured goods. 
(v) Explain, highlighting ONE distinct point why ABC is considered to be a more
accurate method of costing. 

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