Homework Answers
Computation of Production Unitary Cost
| Particulars | Product X | Product Y |
| Material Costs | 250000 | 90000 |
| [10*25*1000] | [12*30*250] | |
| Labour Costs | 200000 | 20000 |
| [4*50*1000] | [2*40*250] | |
| Overhead Costs [WN1] | 124440 | 15560 |
| Total Production Cost | 574440 | 125560 |
| Production Units | 1000 | 250 |
| Production cost per unit | 574.44 | 502.24 |
Working Note 1:
In Absorption costing, direct and indirect overhead costs are added to production cost and allocated on the basis of machine hours or labour hours as the case may be.
In the given question, we have to allocate indirect overhead costs on the basis of labour hours.
Calculation of overhead costs productwise:
| Product X | Product Y | Total | |
| Labour Hours | 4000 | 500 | 4500 |
| [4*1000] | [2*250] | ||
| Indirect Overhead Costs |
140000 [44000+84000+12000] |
||
| Overhead costs per hour |
31.11 [140000/4500] |
||
| Overhead Costs |
124440 [4000*31.11] |
15560 [500*31.11] |
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