Solution-Calculate the cost driver rates for each activity

Calculate the cost driver rates for each activity

Assignment Help Managerial Accounting

Reference no: EM133162723

Question - Mercury Ltd produces two products with details below:

	Glopp	Gash
Production (units)	10,000	5,000
Batch size	100	20
Set ups per batch	3	1
Special parts per unit	1	4
Purchases per year	200	300

Activity	Cost pool £	Cost Driver
Set ups	27,500	Number of set ups per batch
Special parts handling	30,000	Number of special parts per unit
Purchase order	5,000	Number of orders per year

Required -

1. How are direct costs different to indirect costs? Give examples.

2. Calculate the cost driver rates for each activity.

3. How much overhead would be attributed to a unit of Glopp?

4. Compare the usage of Traditional Absorption costing with Activity Based costing.

5. Discuss how budgeting could be applied to ABC costing.

Reference no: EM133162723

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Calculate the cost driver rates for each activity

Reference no: EM133162723

Reference no: EM133162723

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