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Report on Online Return on Capital Employement

   

Added on  2021-02-16

8 Pages1403 Words68 Views
TWOQUESTIONS

INTRODUCTIONQuestion 1(a) Cost per unit of each product by conventional method ABMaterial2235Labour3530Direct cost 5765Production overhead (6/hour)96Total production cost per unit6671(b)Cost per unit of each product by using ABC principle %Total Overhead Level of activity Cost per unit of activity Set ups 258212595586Machining 35114975547502.1Material movement 2582125424193.69Inspection 154927592053.56100328500(c) Comment on the causes ProductsABOverheads per unit (Conventional system)96Overheads per unit (ABC principle)29.7225.77A change to activity based costing results in the overhead costs of A increasing while theoverhead cost of B decreasing. The adoption of ABC provides a fairer unit cost that better reflects the effort required inthe manufacturer of different products.Product B has fewer set ups, material movements and inspections while product A havemore than B. Working notes - Total overheads 1

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