SQU Corporation provides the firm's costing data: Selling Price (OMR) Direct Labour per Unit (OMR) 2.15 Direct Materials per Unit (OMR) 0.20 0.30 Overhead Cost (Moulding) (OMR) | 210,000 Overhead Cost (Packaging) (OMR) 150,000 Units per batch 1,000 Hours per batch Direct Labour Hours Packaging Hours Moulding Hours Activity Levels Packaging hours Moulding hours 1.00 500 0.50 2,100 1.00 Direct Labour Hours 4,200 You are required to: (i) Calculate the Overhead Cost AND the Operating Income under both scenarios of Activity Based Costing (ABC) and Traditional costing (assuming DLH is used as the allocation base); and (ii) Provide your comments on the choice of costing between ABC and Traditional in determining the firm's Operating Income.
SQU Corporation provides the firm's costing data: Selling Price (OMR) Direct Labour per Unit (OMR) 2.15 Direct Materials per Unit (OMR) 0.20 0.30 Overhead Cost (Moulding) (OMR) | 210,000 Overhead Cost (Packaging) (OMR) 150,000 Units per batch 1,000 Hours per batch Direct Labour Hours Packaging Hours Moulding Hours Activity Levels Packaging hours Moulding hours 1.00 500 0.50 2,100 1.00 Direct Labour Hours 4,200 You are required to: (i) Calculate the Overhead Cost AND the Operating Income under both scenarios of Activity Based Costing (ABC) and Traditional costing (assuming DLH is used as the allocation base); and (ii) Provide your comments on the choice of costing between ABC and Traditional in determining the firm's Operating Income.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:SQU Corporation provides the firm's costing data:
Direct Materials per Unit (OMR)
Selling Price (OMR)
Direct Labour per Unit (OMR)
Overhead Cost (Packaging) (OMR)
2.15
0.20
0.30
Overhead Cost (Moulding) (OMR) | 210,000
150,000
Units per batch
1,000
Activity Levels
Packaging hours
Moulding hours
Direct Labour Hours
Hours per batch
Direct Labour Hours
1.00
500
Packaging Hours
Moulding Hours
0.50
2,100
1.00
4,200
You are required to:
(i) Calculate the Overhead Cost AND the Operating Income under both scenarios of
Activity Based Costing (ABC) and Traditional costing (assuming DLH is used as the
allocation base); and
(ii) Provide your comments on the choice of costing between ABC and Traditional in
determining the firm's Operating Income.
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