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AJ manufacturing company produces about one hundred products. Its largest selling product is product X...

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Question

Accounting

AJ manufacturing company produces about one hundred products. Its largest selling product is product X and its smallest is product Y. relevant data is given below:

Particulars

Product X

Product Y

Total product

Units produced per annum

Material cost per unit

Direct labor per unit

Machine time per unit

No. of set ups per unit

No. of purchase orders for material

No. of times material handled

Direct labor cost per hour

Overhead Costs:

Set up

Purchasing

Material handling

Machines

Total Machine hours are 600,000 hours.

5000

Rs.1

15 min

1 hour

24

36

200

1000

Rs.1

15 min

1 hour

2

6

15

50,000

500

2800

12000

Rs.5.00

280,000

145,000

130,000

660,000

1,215,000

Required:

a)Find out the production unit cost of product X and product Y.

b)Using conventional product costing machine hour overhead absorption rate.

c)Using ABC (Activity Base Costing ) compare the results of methods and comment.

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