The Little star co produces two products; X and Y both made from the same material. The company provided the following details. A B Production and sales 1500 units 1200 units Selling Price $15 per unit $18 per unit Raw material usage 2kg per unit 3kg per unit Direct labour 0.1 hour per unit 0.15 hour per unit Machine hour 0.5 hour per unit 0.7 hour per unit $ Machine set up cost 26,550 Machine running cost 66,400 Procurement cost 48,000 Delivery cost 54,320 TOTAL Overhead cost 195,270 The price for raw materials is available throughout at $1.20 per kg. Direct labour is $ 14.80 per hour. Required, Calculate the cost per unit for product X and Y using absorption cost Give your recommendation on which product can be produced more and why.
. The Little star co produces two products; X and Y both made from the same material. The company provided the following details.
A B
Production and sales 1500 units 1200 units
Selling Price $15 per unit $18 per unit
Raw material usage 2kg per unit 3kg per unit
Direct labour 0.1 hour per unit 0.15 hour per unit
Machine hour 0.5 hour per unit 0.7 hour per unit
$
Machine set up cost 26,550
Machine running cost 66,400
Procurement cost 48,000
Delivery cost 54,320
TOTAL Overhead cost 195,270
The price for raw materials is available throughout at $1.20 per kg. Direct labour is $ 14.80 per hour.
Required,
- Calculate the cost per unit for product X and Y using absorption cost
- Give your recommendation on which product can be produced more and why.
Step by step
Solved in 3 steps
