te ‘oma CTT Saien aves tines URE manutacti, 5 threa ynd 21 USUAIY prodcey |, Prod, Products ®, @ and R which are similar in nature lu port machine hours ang a. SUON runs oF 109 unin Product P and R require “Ply hours, whereas € Com pours. THE overheads MMCUrred by th Product O requires only machine (machine Departmen; zh tC OsDensag “MEANY during the first quarter are as under: assembly Departmant ©tbenses 18,28,000 [setup costs | 6.72,000 jsiores receiving cost soto order Processing ang dispatch 1.20,000 | |speetian 20d Quality control cost 1,80,000 ifedate related to the three Products dup, 36,000 i el are as under: _ [iss produced and aly —_— imp 2} | |machine hours worked a coon 12,000 18,000 jassembly hours worked S000 Ve 48,000 hrs. | $4,000 hrs. Iidrect labour hours) jin rs, 27,000 hrs. eustomers’ orders executed (in numbers) | Lash soa in |twmber of requisitions raised on the stores | 40 ‘yo = tequired a 1 so Prepare a statement showing details of Overhead casts allocated to each product pe using activity based costing products is as follows: Vartcutars | ProductA) Product p| Product Dect Materials a: 80g tu) Srect Labour @ Z10/hour | 30 40 50 Wu | Prduction Overheads | 30 40 | 50 Zu Total Cost | 110 120 140 Zu Boney Produced 30000 20,000, 30,000 | Units 2228: : — Scanned with CamScannerINTER CA. | (This activity is driven by no. of ATM transactions) 5,00,000 | Hai this amount is fixed and nO change is expected The variable partion is expected to increase to three times the current level. (This activity is driven by the number of computer transactions) ‘Presently, 3 1ac statements are made. In the budget period, 5 lac statements are expected. For suing ‘Statements ~78,00,000' | jis | every increase of one lac statement, one lac rupees is the ( budgeted increase. (This activity fs driven by the | _______”y __| number of statements) _ |Computer Inquiries Estimated to increase by 80% | during the budget period {This activity is driven by | telephone minutes) _ The activity drivers and their budgeted quantifies are given below: Loans| Credit Cards Activity Drivers = Deposits | | No, of ATM Transactions 1,50,000 5 | ‘50,000 jes ‘of Computer Processing | “Transactions 15,00,000| 2,00,000, —=3,00,000 | No. of Statements ta be issued 3,50,000 50,000/ —1,00,000 | Telephone Minutes 3,60,000' —1,80,000' —_—_‘1,80,000 ‘of 58,600 deposit accounts, 13,000 loan accounts, and The bank budgets a volume 14,000 Credit Card Accounts. Required () Calculate the budgeted rate for each activity. {ll) Prepare the budgeted cost statement activity wise. (il) Find the budgeted product cost per account for each product using (i) and (ii) above. 2230: Scanned with CamScannerINTER CA.- COSTING bour hours. & newly 1 shoutg 6-2020 Ltd. was absorbing overheads on the basis of direct 12 appointed management accountant has suggested that the compan als as follows: introduce ABC system and has identified cost drivers and cost PO 7 cost Driver Associated Cost Activity Cost Pool Stores Receving~)SSS Prrehase Reaui "2,96,000 Inspection | Number of Production Runs 2,94,000 Dispatch | Orders Executed | 2,10,000 | 12,00,000 Machine Setup | Number of Setups | The following information is also supplied: Details = S*~*~*~=CS«S~S~S*«é rt product B| Product c NoofsewpsSOSO*~=~S~dS 360) ~SC«ST SD No. of Orders Executed 180 270 300 No. of Production Runs | 750 | 1,050 1,200 No. of Purchase Requisitions | 300 | 450 500 Required Calculate activity based production cost of all the three products. Question 3 ‘Humara - Apna’ bank offers three products, viz., deposits, Loans and Credit Cards. The bank has selected 4 activities for a detailed budgeting exercise, following activity based costing methods. The bank wants to know the product wise total cost per unit for the selected activities, so that prices may be fixed accordingly. The following information is made available to formulate th | Present Cost @) | Estimation for the budget period e budget: [Activity ATM Services: | |All fixed, no change | | | (a) Machine Maintenance | 4,00,000 Fully fixed, no change. | | (b) Rents 2,00,000 | Expected to double during | | budget period. (c) Currency 1,00,000 | 1229: Scanned with CamScannerINTER CA —COSTING Eemsuamcensses TER CAT EOUTING Question 4 Asian Mfg. Co. had decided to increase the size of the store. It wants the information about the probability of the individual product lines: Lemon, Grapes and Papaya, \t Prone following data for the 2013 for each product lines [Particulars . * Lemon] Grapes| Papaya | Revenues (®) ———49350/ 2,10,060) 1,20.930 Cost of goods sold () 60,000| —_1,50,000 90,000 [sceneries mre me | Number of deliveries aa a 0 a ceived 30 219 66 Hours of shelf stocking time 54) 540 270 [Items sold 12,600| 110,400 | 30,600 Asien Mig, Co. also provides the following information for the year 201 fo Activity [ Description of Activity | Total Costs Cost Allocation | _ @) Basis Bottle returns | Returning ofemptybottles |, 5) | Direct tracingto | | to the store 1,200 | product line [Ordering | Placing of orders of 7156 purchase | | 15,600 | purchases | orders Delivery | Physical delivery and the 35,200 7315 deliveries | receipts of merchandise : Shelf stocking | ‘Stocking of merchan| "64 hours of time | store shelves and ongoing 17,280 restocking Customer ‘Assistance provided to | 1,53,600 items support customers including 30,720 | sold | bagging and checkout Required {i) Asian Mfg. Co. currently allocates store support costs (all costs other than the cost of goods sold) to the product line on the basis of the cost of goods sold of each product line. Calculate the operating income and operating income as the tage of revenue of each product line. Mfg. Co. allocates store support costs ( to the product lines on the basis of Al come and operating income as the percent all costs other than the cost of BC system, calculate the tage of revenue of each percent If Asian goods sold) operating in product line. (iii) Compare both the systems. (i) 2231: Scanned with CamScanner= j.K. SHAH CLASSES INTER CA - COSTING Question 5 The following are Product Alpha's data for next year budget: | activity | cost river | Cost Driver Volume/ Year | Cost Poo! @) | | purchasing | Purchase orders | 1,500 | 75,000 | [setting | Batches produced | 2,800 | 112,000 | Materials | Materials | 8,000 | 96,000 | \ handling | Movements | Inspection Batches produced | 2,800 | 70,000 | Machining costs | Machine hours | 50,000 | 1,50,000 | Purchase orders 35 Output 15,000 units Production batch size 100 units Materials movements per batch 6 Machine hours per unit o4 Required (I) Caleulate the budgeted overhead costs using activity based costing principles. (ii) Calculate the budgeted overhead costs using absorption costing | overhead using machine hours), absort Scanned with CamScanner