Calculate the production overheads to be absorbed

Assignment Help Cost Accounting

Reference no: EM13920584

A company manufactures two products, L and M, using the same equipment and similar processes. An extract of the production data for these products in one period is shown below.

Quantity produced (units)	L 5,000	M 7,000
Direct labour hours per unit	1	2
Machine hours per unit	3	1
Set-ups in the period	10	40
Orders handled in the period	15	60
Overhead costs Relating to machine activity		$ 220,000
Relating to production run set-ups		20,000
Relating to handling of orders		45,000
		285,000

Required

Calculate the production overheads to be absorbed by one unit of each of the products using the following costing methods.

(a) A traditional costing approach using a direct labour hour rate to absorb overheads

(b) An activity based costing approach, using suitable cost drivers to trace overheads to products

Reference no: EM13920584

Questions Cloud

Identify major issues affecting quality and performance : Quality Assurance Programs are an important aspect of organizational performance. Complete the following actions:-Analyze the situation below and identify at least 2 major issues affecting quality and performance.

Calibrate the equipment and software : The system included finely tuned scales that fit into Ever Fresh's automated assembly line, Ortiz's proprietary software modified to allow the weighing system to function in Ever Fresh's automated system, and a one-year contract to calibrate the equi..

What is the process of plea negotiations : What is the process of plea negotiations? How does the plea bargain process help the prosecution, the defendant, and the people?

Required to safeguard company assets : At the end of the period it is necessary to close all temporary accounts. (1) Explain why this process is required and (2) provide an example of the closing of an expense account, Supplies Expense in the form of a journal entry.

Calculate the production overheads to be absorbed : Calculate the production overheads to be absorbed by one unit of each of the products using the following costing methods. A traditional costing approach using a direct labour hour rate to absorb overheads.

Create an accounting equation using the elements assets : Will all businesses have the same type of accounts? Explain your answer.

Method of recognition the gross profit : Assuming BCC uses the percentage-of-completion method of recognition the gross profit recognized in 2013 would be rounded to the nearest thousand

Law of diminishing marginal productivity : 1. The law of diminishing marginal productivity implies that the marginal product of a variable input: 2. Suppose foreign shrimp prices drop by 32 percent and importers gain a 90 percent market share. From this information, what would economists st..

What is the joint costs : Some companies have moved to JIT without changing the substance of their accounting systems. Why relying on the former accounting system may present problems for management

User Account

All Pages