ABC Costing – Anderson Ltd June 2020 (Kaplan)

Hi there

Can you answer the following question for me please

Anderson Ltd has a single production process for which the following costs have been estimated for the period ending 31 December 2015:

1. Material receipt and inspection cost: $15,600
2. Power cost: $19,500
3. Material Handling cost $13,650
Total = $48,750

Three Products X, Y and Z are produced by workers who perform a number of operations on material blanks using hand held electrically powered drills. The workers have a wage rate of $9 per hour.

The following budgeted information has been obtained:

Product X Product Y Product Z
Production Quantity 2000 1500 800
Batches of material 10 5 16
Direct material per unit, in m2 4m2 6m2 3m2
Direct material per unit, in $ $5 $3 $6
Direct labour, in minutes 24 40 9
No.Power drill operations per unit 6 3 2

Cost drivers:
Material receipt & inspection – No.Batches of material
Process power – No.Power drill operations
Material handling: Quantity of material (sq m2) handled

Task – Calculate using ABC the budgeted product cost per unit for product X.

Options are $8.56, $16.10, $18.12 or $20.40

Please help.