ACCT 1064 Cost Analysis and Organisational Decisions Assignment- Singapore Institute of Management
Kajaria is a manufacturing business which makes a product in two models: Model M1 and model M2. Details of the two products are as follows:
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Particulars
|
Model M1
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Model M2
|
|
Annual sales
|
12,000 units
|
10,000 units
|
|
Number of sales orders
|
200
|
125
|
|
Sales price per unit
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$75
|
$70
|
|
Direct material cost per unit
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$9
|
$9
|
|
Direct labour hours per unit
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2 hours
|
2.5 hours
|
|
Direct labour rate per hour
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$9
|
$9
|
|
Special parts per unit
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15
|
20
|
|
Production batch size
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75 units
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500 units
|
|
Set-ups per batch
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5
|
3
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Other relevant information is as follows:
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Particulars
|
Amount ($)
|
Cost driver
|
|
Setup costs
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86,000
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Number of setups
|
|
Material handling costs
|
54,000
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Number of batches
|
|
Special part handling costs
|
57,000
|
Number of special parts
|
|
Invoicing
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30,875
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Number of sales orders
|
|
Other overheads
|
114,750
|
Direct labour hours
|
A customer has indicated an interest in placing a large order for either model M1 or M2 and the sales manager wished to try to sell the higher priced model M1.
Required:
i. Calculate the profit per unit for each model using activity-based costing.
ii. Identify which product the sales manager should try to sell based on the information provided by your analysis. If there is a loss-making product, then advise the relevant information that the management needs to consider in taking any decision in relation to the loss making product.
Format your assignment according to the following formatting requirements:
i) The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
ii) The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
iii) Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.