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ABC costing question

Forums › ACCA Forums › ACCA PM Performance Management Forums › ABC costing question

  • This topic has 0 replies, 1 voice, and was last updated 10 years ago by zeshan7808.
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  • November 12, 2014 at 2:02 pm #209361
    zeshan7808
    Member
    • Topics: 4
    • Replies: 13
    • ☆

    Please any one can help me to solve this question: not sure of cost drivers for Utilities/Salaries of supervisor/salaries of cleaners/Misc cost:

    RCL manufactures three products. Presently, overheads are allocated to each product on
    the basis of direct labour hours. In order to determine the cost of products more accurately,
    RCL has decided to implement Activity Based Costing for allocation of overheads.
    The following data has been extracted from RCL’s budget for the next year:
    Products X Y Z
    Cost per unit: ————-Rupees ————-
    Direct material @ Rs. 200 per kg 400 300 500
    Direct labour @ Rs. 50 per hour 300 350 250

    Other data:
    Production units 50,000 40,000 25,000
    Batch size units 500 250 250
    Inspection time per batch hours 20 15 18
    Economic order quantity (EOQ) kg 10,000 12,000 6,250
    Details of factory overheads budgeted for the next year are as under:
    Rs. in ‘000

    Procurement department costs 2,500

    Batch set up costs 3,600

    Quality control department costs 4,510

    Utilities 4,230

    Salaries of supervisors and foremen 3,525

    Salaries of cleaners and maintenance staff 1,410

    Miscellaneous costs 705

    Total 20,480

    Required:
    Compute product-wise cost per unit using Activity Based Costing.

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