Task: Comparison of activity based and conventional product costs: manufacturer
Problem: fantastique fashions Ltd has switched from a conventional product costing system to an activity-based product costing system to assign manufacturing overhead costs to product. The table below shows the cost per unit for two products under the two costing systems :
Costing System Product A Product B
Conventional $36 $25
ABC $30 $45
Required:
1) Describe the most likely features of product A and B replacing the question marks (?) in the following table with ‘Yes’ or ‘No’.
Product feature Product A Product B
High-volume product line ? ?
Low-volume product line ? ?
Produced in small batches ? ?
Produced in large batches ? ?
Simple to produce ? ?
complex to produce ? ?
2) Explain the answer to requirement 1.