Question

b. The company's ABC system uses two indirect-cost pools. One cost pool is for set up costs and the other for advertising, Zany Brainy allocates set up costs to the two lamps based on setup labour-hours and advertising costs based on the direct manufacturing labour-hours. Under ABC system, determine total product cost per unit of each of the company's two products. (25 marks)

Answer 1

The question is solved on white A4 papers. Please, find the attached solution.

Date Page (a) Set-up Cost turns $110,000 grush or smalt ta Diect labour hours Home sive lamp = 0.5 X 10,000 5,000 Industry peze lamp = 0.7 X 2,000g ooo, la 1.400 loter Total labour hours = 5,000 t 1,400 6,400 cost Home size The wto Mart det up cost 5,000 y $11,0000 => 14:00 ($110, ovo ) (16400 TO 6400 121 = $85,938 = $24,062 Industry vize x $110,000 = ব) ০১) * $150,000 5000 6400 +1400 x $150,000 6400 2 $32,812 $117, 188 Advertising $(150000 ) Indirect beloniylautoring $260,000 7 5ooo x $260,000 6400 art $203, 125 ☆ 1400 X 6400 $56,875 ($060,000 Total cost $113,749 $ 406,251

Total Cost / unit goo, 011? # Home alize lamp → Total Cost ( los oud m ($10 + $16) + $406,251 O,01 = $260,000 + $ 406, Q571 $666,251 to ring wheel Total umitiet 100,000 Total Cost unit = $666, 251 / Lato I 10,000 $ 66.6257 stre smalt # Industry -> Total Cost 2,000 x ($15 +$16)) + $113,749 edoch $6220050 + $113,749 osobair & Cont sਹ , 0 ਤੋਂ 30 ਦੇ GON $175,749 7:0 size lamp Total imit 2,0 Total cost unit = $175,749 اندرا coot) riot 2000 too Co. Og $87.8745

Date Page = - 150 tubo Set up lost $110,000 Set up hour (patch * Home Size 1 x 200 - Dod Industy pize - 3x50 Total 350 go Set up р cost (Home Size ) anoidos 200 $110,000 350 $ 62, 857 X Х get up 157 Х 23.350 Cost (Industry Size) $ 110,000 0.000, $47,143 AL Advertising Cost → Cost (Sold in part a) Home Size = $117, 188 $32,812 Total Home Alize = $62,857 + $114,188 = $180,045 Industry poize = $32812 + $47,143 Industry Size = $79,955

toal Job X Total Product Coot / unit Home Size Total Peoduct coot - ( 10,000 x($10+$16)) + $ 180, 045 $26,000+ $180,045 $206,045 Total imits 20 mode Total Cost/ unit = $206,845 Ec 10,000 10,ooo $20.6045 # Industry Size lamp → Cost = (2000 X ($15+ $16) ) + $ 79,955 Total Cost $62,000 + $ 79,955 $141,955 Total mits = 2,000 38 Total Cost / unit $ 141,9550 small S. 2000 $70.9775