Matolo ltd manufactures two types of products BELL and CELL.The following budgeted information is available PRODUCT BELL CELL Budgeted Production and Sales in Units 550 550 Labour hours per unit 100 100 Variable cost per unit K15,000 K16,000 Total budgeted labour hours 110,000 240,000 The company has general fixed overheads amounting to K13,010,000 which is absorbed using labour hour rate. The analysis of the K13,010,000 general fixed overheads revealed the following: Overhead item K’000 Setup costs 6,000 Inspection 3,510 Labour costs 3,500 It was further noted that for each production run, 5 Units of BELL and 20 units of CELL and produced. For each production run 10 inspections are required for BELL and 40 inspections are required for CELL. The company currently uses absorption costing using overhead absorption rate based on labour hours. Required. Calculate the total cost of product BELL and CELL using absorption costing. Calculate the total cost of product BELL and CELL using Activity Based Costing. Calculate the overhead cost per inspection using Activity Based Costing Find the setup cost per unit of product CELL using Activity Based Costing Describe any three (3) weaknesses of Activity-based costing
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Matolo ltd manufactures two types of products BELL and CELL.The following budgeted information is available
PRODUCT
BELL CELL
Budgeted Production and Sales in Units 550 550
Labour hours per unit 100 100
Variable cost per unit K15,000 K16,000
Total budgeted labour hours 110,000 240,000
The company has general fixed
The analysis of the K13,010,000 general fixed overheads revealed the following:
Overhead item K’000
Setup costs 6,000
Inspection 3,510
Labour costs 3,500
It was further noted that for each production run, 5 Units of BELL and 20 units of CELL and produced. For each production run 10 inspections are required for BELL and 40 inspections are required for CELL. The company currently uses absorption costing using overhead absorption rate based on labour hours.
Required.
- Calculate the total cost of product BELL and CELL using absorption costing.
- Calculate the total cost of product BELL and CELL using Activity Based Costing.
- Calculate the overhead cost per inspection using Activity Based Costing
- Find the setup cost per unit of product CELL using Activity Based Costing
- Describe any three (3) weaknesses of Activity-based costing
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