ompany AA has 6 standard products from stainless steel and brass. The company’s most popular product is Product XX The following are Product XX's data for next year budget: Activity Cost Driver Cost Driver Volume/year Cost Pool (RM) Purchasing Purchase Orders 1,500 75,000 Setting Batches Produced 2,800 112,000 Material Handling Material Movements 8,000 96,000 Inspection Batches Produced 2,800 70,000 Machining Cost Machine Hours 50,000 150,000 Purchase Orders 25 Output 15,000 units Production Batch Size 100 units Material movement per batch 6 Machine hour per unit 0.1 Calculate: a) Calculate the budgeted overhead costs using activity-based costing principles b) Calculate the budgeted overhead costs using absorption costing (absorb overhead using machine hours
ompany AA has 6 standard products from stainless steel and brass. The company’s most popular product is Product XX The following are Product XX's data for next year budget: Activity Cost Driver Cost Driver Volume/year Cost Pool (RM) Purchasing Purchase Orders 1,500 75,000 Setting Batches Produced 2,800 112,000 Material Handling Material Movements 8,000 96,000 Inspection Batches Produced 2,800 70,000 Machining Cost Machine Hours 50,000 150,000 Purchase Orders 25 Output 15,000 units Production Batch Size 100 units Material movement per batch 6 Machine hour per unit 0.1 Calculate: a) Calculate the budgeted overhead costs using activity-based costing principles b) Calculate the budgeted overhead costs using absorption costing (absorb overhead using machine hours
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Company AA has 6 standard products from stainless steel and brass. The company’s most popular product is Product XX
The following are Product XX's data for next year budget:
| Activity | Cost Driver | Cost Driver Volume/year | Cost Pool (RM) |
| Purchasing | Purchase Orders | 1,500 | 75,000 |
| Setting | Batches Produced | 2,800 | 112,000 |
| Material Handling | Material Movements | 8,000 | 96,000 |
| Inspection | Batches Produced | 2,800 | 70,000 |
| Machining Cost | Machine Hours | 50,000 | 150,000 |
| Purchase Orders | 25 |
| Output | 15,000 units |
| Production Batch Size |
100 units |
| Material movement per batch | 6 |
| Machine hour per unit | 0.1 |
Calculate:
a) Calculate the budgeted
b) Calculate the budgeted overhead costs using absorption costing (absorb overhead using machine hours)
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