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Jola Publishing will produce its annual output of 1,000,000 CBs in four production runs and approximately 10,000
TJs per month in each of 12 production runs.
Machine time per unit is 6 minutes for the CB and 10 minutes for the TJ. Machine time per unit is 6 minutes for the CB and 10 minutes for the TJ.
The overheads involved have been analysed as follows:
Overhead $ Activity driver
Production costs 2,160,000 Machine hours
Quality control 668,000 Number of inspections
Production set up costs 52,000 Number of set ups
2,880,000my question is for production cost calculation for CB first needs to cal machine hrs which 120,000 so as per answer what they have done is :
(2160000)/120000= 18
but as per my understanding after that also dont we need to 18*6/60 = 1.8 should be the cost instead? because if we dont multiple it for each dept then for both CB and EX it will be same 18 dollar isnt it ?
I understand that it is a very basic thing to ask my this is the confusion which I am facing a lot in this chapterYou mean property costs (not production cost).
The answer has done what you are writing.
The final two columns in workings (2) are the costs per unit for each product.
For CB it is 6/60 x 18 = $1.80
For TJ it is 10/60 x 18 = $3.00Sir the question is as below:
What is the total activity based allocation of production overheads for production of the CB?
and the answer is 18 dollar however if they are asking for CB then it should be 1.8 instead it ? that’s my question ..18 is the cost of the driver..I have the examiners answer in front of me and I have already answered your question!!
The cost is $18 per machine hour. Since CB takes 6 minutes, the cost per unit of CB is 6/60 x $18 = $1.80, and it is the cost per unit that is required.
Have you actually watched my free lectures on ABC?
The lectures are a complete free course and cover everything needed to be able to pass the exam well.
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