Homework SourseQ132 Randys Components uses an activity based costing system
Q13-2: Randy’s Components uses an activity based costing system for its product costing. For the last quarter, the following data relates to costs, output volume and cost drivers. If set-up costs are driven by the number of production runs, what are the correct set-up costs for each product?
Overhead Costs
£
Machinery
172,000
Set-ups
75,000
Materials Handling
25,000
Total
272,000
Question 6. 6. Q13-2: Randy’s Components uses an activity based costing system for its product costing. For the last quarter, the following data relates to costs, output volume and cost drivers:
Overhead Costs
£
Machinery
172,000
Set-ups
75,000
Materials Handling
25,000
Total
272,000
Product information
A
B
C
Production and sales units
5,000
3,500
2,800
Number of production runs
11
9
6
Number of stores orders
15
10
9
(Points : 9)
Potential Matches:
1 : £8.65
2 : £8.24
3 : £9.27
Answer
_____: Product A
_____: Product B
_____: Product C
| Overhead Costs | £ |
| Machinery | 172,000 |
| Set-ups | 75,000 |
| Materials Handling | 25,000 |
| Total | 272,000 |
Solution
Set up cost = $ 75000
Number of production runs = 26
Cost of one production run = $ 2884.62
Thus, setup cost for each product would be
| Product | Working | Cost |
| A | 2884.62 * 11 | $ 31731 |
| B | 2884.62 * 9 | $ 25962 |
| C | 2884.62 * 6 | $ 17308 |
