A company produces three products A, B and C for which the standard costs and quantities per unit are as follows:
Products A B C
Quantity produced
10,000 20,000 30,000
Direct material/p.u. (Rs.) 50 40 30
Direct labour/P.u. (Rs.) 30 40 50
Labour hours/P.u. 3 4 5
Machine hours/p.u. 4 4 7
No. of purchase requisitions 1,200 1,800 2,000
No. of set ups 240 260 300
Production overhead split by departments -Department 1 = 11,00,000
-Department 2 = 15,00,000
Department 1 is labour intensive and department 2 is machine intensive
Total labour hours in Department 1 = 1,83,333
Total machine hours in department 2 = 5,00,000
Production overhead split by activity
-receiving/inspecting
Rs. 14,00,000
- Production scheduling/machine set up Rs. 12,00,000
Rs. 26,00,000
No. of batches received/inspected = 5,000
No. of batches for scheduling and set up = 800
You are required to:
(i) Prepare product cost statement under traditional absorption costing and Activity based costing method