The question is shown below:
Question: Fixie Berhad manufacture special bicycle for disable person. The company was adopting ABC system in their operation. Below is the information regarding activity cost pools, cost drivers and pools rates for product costing system.
| Activity cost Pool |
Overhead Cost (RM) |
Budgeted Level for cost Drivers |
| Purchasing and material handling |
150,000 |
RM 300,000 |
| Product design |
70,000 |
2,500 hrs |
| Machine setup costs |
60,000 |
4,000 runs |
| Machine maintenance |
25,000 |
30,000 hrs |
This company manufactures two different products which required the following.
|
10,000 units of AA |
5000 units of BB |
| Raw material cost |
RM 50,000 |
RM 250,000 |
| Hours in design department |
1,000 |
1500 |
| Product runs |
2,000 |
2000 |
| Machine hours |
10,000 |
20000 |
| Direct labour hours |
10,000 |
5000 |
Required
a. Complete activity rates for each activity pool.
b. Compute total overheads that should be assigned for each of the products.
c. Compute unit cost PER products.
d. Assume this company use traditional costing based on direct labor hours. The direct labour hour budget
- Compute POHR.
- Compute total overhead cost for each product.
- Compute unit cost for each product.