Kamaljeet Manufacturing produces two products, A and B. Data relating to the two products follow:...
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Accounting
Kamaljeet Manufacturing produces two products, A and B. Data relating to the two products follow:
Product A
Product B
Direct Material
82
32
Direct Labour (@$20/h)
60
80
Normal Capacity:
Product A: 5,000 units and Product B 10,000 Units
The company has always used direct labour hours as the base for applying factory overhead costs to products.
The company has identified 4 separate activities as follows:
Activity Centre
Traceable
Total no. of
Product A
Product B
Costs
events
Machine Setups
448,518
310
187
123
Purchasing costs
560,648
709
496
213
Computer processing
336,389
311
162
149
General Factory
897,036
16659
8245
8414
Total Overhead
2,242,591
(a) Using the traditional method, calculate the POHR and the cost to produce one unit of each product
(b) Assume the company adopts ABC, calculate the overhead rate for each cost driver, the amount of overhead to allocate to each product and the cost to produce one unit of each product
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