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WriteUps Limited Case Study - Activity-Based Costing System & Cost Drivers And Production - Accounting Assignment Help
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Assignment Task
QUESTION - Consider the following information by WriteUps Limited, a company that manufactures cardboard paper, plain white paper and blue margin paper.
WriteUps Limited uses an Activity-Based Costing System in allocating overhead costs to the various paper products it manufactures. The following table was given to you by your costing clerk:
|
Prime costs and usage per pad of the product |
||||
|
Cardboard |
Plain White |
Blue Margin |
Cost per hour or kg |
|
|
Machine hours |
6 minutes |
3 minutes |
5 minutes |
R 75 |
|
Labour hours |
12 minutes |
5 minutes |
10 minutes |
R 60 |
|
Paper Pulp |
750 grams |
250 grams |
300 grams |
R 25 |
Overhead costs are allocated amongst four department: Production department Alpha, Production department Omega, the Packaging Service department and the Maintenance Service department. Production department Alpha is machine intensive and Production department Omega is labour intensive. Another costing clerk has prepared the following table for you:
Cost Pools
|
Cardboard |
Plain White |
Blue Margin |
Total |
|
|
Alpha |
? |
? |
? |
R640 000 |
|
Omega |
? |
? |
? |
R1 250 000 |
|
Packing of Orders |
? |
? |
? |
R350 000 |
|
Maintenance |
? |
? |
? |
R840 000 |
Cost Drivers and Production
|
Cardboard |
Plain White |
Blue Margin |
Total |
|
|
Maintenance hours |
3 000 |
1 000 |
2 000 |
6 000 |
|
Orders of paper |
300 |
750 |
500 |
1 550 |
|
Quality Control checks |
500 |
800 |
600 |
1 900 |
|
Production (exam pads) |
130 000 |
240 000 |
180 000 |
550 000 |
|
Labour hours |
18 000 |
33 000 |
25 000 |
76 000 |
|
Machine hours |
10 000 |
18 000 |
12 000 |
40 000 |
Sales Data
|
Cardboard |
Plain White |
Blue Margin |
||
|
Mark-up on cost |
15% |
25% |
20% |
|
|
Competitors prices |
R46.26 |
R26.12 |
R36.50 |
Required: (Show all your workings and round off the rates to 2 decimal places)
1. Calculate the prime cost of single cardboard paper, plain white paper and blue margin paper. (15) 2. Determine the selling price of a single cardboard paper, plain white paper and blue margin paper using the type of costing system that the company uses. (25) 3. Based on your calculations prepare in question 2, is there anything that you would conclude about your calculations and compared to the data given? (10)
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