Problem:
The budgeted overheads and cost driver volumes of XYZ are as follows.
|
Cost Pool
|
Budgeted
Overheads (Rs.)
|
Cost Driver
|
Budgeted Volume
|
|
Material procurement
|
5,80,000
|
No. of orders
|
1,100
|
|
Material handling
|
2,50,000
|
No. of movements
|
680
|
|
Set-up
|
4,15,000
|
No. of set ups
|
520
|
|
Maintenance
|
9,70,000
|
Maintenance hours
|
8,400
|
|
Quality control
|
1,76,000
|
No. of inspection
|
900
|
|
Machinery
|
7,20,000
|
No. of machine hours
|
24,000
|
The company has produced a batch of 2,600 components of AX-15, its material cost was Rs. 1,30,000 and labor cost Rs. 2,45,000. The usage activities of the said batch are as follows.
Material orders & 26, maintenance hours & 690, material movements & 18, inspection & 28, set ups & 25, machine hours & 1,800
Calculate & cost driver rates that are used for tracing appropriate amount of overheads to the said batch and ascertain the cost of batch of components using Activity Based Costing.