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Calculation of Costs | Assignment

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Added on  2019-11-25

Calculation of Costs | Assignment

   Added on 2019-11-25

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(a)Calculation of cost per unit of products using the conventional approachParticularsFredMarthaDirect Material4060Direct Labour3045Manufacturing overhead (refer WN-1)96144Cost per unit166249WN-1Calculation of predetermined overhead rate:Total Budgeted Manufacturing Overhead = $816,000 Allocation basis = Direct Labour Hours Predetermined Overhead Rate = Budgeted Manufacturing Overhead/Direct Labour HoursPredetermined Overhead Rate (per hour) = $816,000/17,000Predetermined Overhead Rate (per hour) = $48 Calculation of Direct Labour HoursParticularsUnitsHour per unitTotalFred1,00022,000Martha5,000315,000Total Direct Labour Hours17,000(b)Calculation of cost per activity using Activity Based CostingOverheadsCost driverBudgetedLevelOverheadAmountCost peractivityMachine related costsMachine hours9,000450,00050Setup and inspectionNumber of production runs40180,0004,500EngineeringEngineering change order10090,000900Plant related costsSquare footage of space1,92096,00050816,0005,500
Calculation of Costs | Assignment_1
(c)Calculation of cost per unit of products using the Activity Based CostingParticulars Fred Martha Units Rate perunitTotal Units Rate perunitTotalDirect Material1,0004040,0005,00060300,000Direct Labour1,0003030,0005,00045225,000Manufacturing overheadMachine related costs4,00050200,0005,00050250,000Setup and inspection204,50090,000204,50090,000Engineering7590067,5002590022,500Plant related costs1,5365076,8003845019,200Total Costs504,300906,700No. of Units1,0005,000Cost per unit504.30181.34Cost per unit (rounded off)500.00180.00WN-1: Calculation of activity consumed by each productOverheadsCost driver Budgeted Level OverheadAmount Cost peractivity Activity Required FRED MARTHAMachine related costsMachine hours9,000450,000504,0005,000Setup and inspectionNumber of production runs40180,0004,5002020EngineeringEngineering change order10090,0009007525Plant related costsSquare footage of space1,92096,000501,536384816,0005,5005,6315,429(d)Calculation of Selling Price under Activity Based CostingParticularsFREDMARTHACost per unit500180Add: Profit Margin10036Selling Price600216
Calculation of Costs | Assignment_2

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