Problems on ABC Costing: Part 4

Chapter 1: Specialist cost and management account techniques Topics: Problems on ABC Costing- Part 4 Subject: Performance Management #BBA #Bcom Performance Management Notes: Question 4: XYZ ltd manufactures three products A, B, C. The following includes the details relating to manufacture of each product. Pts Output (units) Mts cost PU Labour cost PU Machine time PU Direct Labour hrs PU A 6000 15 2 0.25 0.25 B 8500 24 2 0.25 0.4 C 4800 18 4 0.25 0.4 The following is the departmental budgets Machine oriented overhead - 16,500 Set up cost - 38920 Material ordering - 24,630 Material handling - 32,480 The budget absorbs these overheads into production using a budgeted machine hour rate method. It has been proposed that the overhead budget be recalculate using ABC method of costing. Pts No of set ups No of material orders No of materials handled A 1 1 3 B 4 3 10 C 2 2 3 Solve using Traditional & ABC method of costing. Audio credits: https://www.instagram.com/drew_sorbet/