Question 6: Your company currently produces a range of three products, D, E, and F to which the following details relate for Period 2. D E F Production (units) 1,500 2,500 14,000 Material cost per unit Br. 18 Br. 10 Br. 20 Labor hours per unit 1 3 2 Machine hours per unit 3 2 6 Labor costs are Br. 8 per hour and production overheads are currently absorbed in the conventional system by reference to machine hours. Total production overheads for Period 2 have been analyzed as follows: Set-up cost 327,250 Handling cost 187,000 Machine cost 140,250 Inspection cost 280,500 935,000 Calculate the cost per unit for each product using conventional The introduction of an ABC is being considered and to that end the following volume of activities have been identified with the current output levels. D E F Number of set-up 90 138 576 Number of material issues 16 28 116 Number of inspections 180 216 804 ( b) Calculate the cost per unit for each product using the ABC approach
Question 6:
Your company currently produces a range of three products, D, E, and F to which the following details relate for Period 2.
D E F
Production (units) 1,500 2,500 14,000
|
Material cost per unit |
Br. 18 |
Br. 10 |
Br. 20 |
|
Labor hours per unit |
1 |
3 |
2 |
|
Machine hours per unit |
3 |
2 |
6 |
Labor costs are Br. 8 per hour and production
Set-up cost 327,250
Handling cost 187,000
Machine cost 140,250
Inspection cost 280,500
935,000
- Calculate the cost per unit for each product using conventional
The introduction of an ABC is being considered and to that end the following volume of activities have been identified with the current output levels.
D E F
Number of set-up 90 138 576
Number of material issues 16 28 116
Number of inspections 180 216 804
( b) Calculate the cost per unit for each product using the ABC approach
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