SolnsMidsem2009_3 - Mid-session Practice Questions and...

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Mid-session Practice Questions and Solutions: Installment 3 Allow 15 Minutes for this Question Divine Feline Ltd specialises in producing gour met cat food. It produces three products: Fussy Kitten, Divine Cat, and Gourm et Cat. Most of Divine Feline Ltd’s customers are specialist pet shops that require very little marketing or customer support. Divine Feline Ltd is currently using a conventional product co sting system. Its CFO Ms Jean Pryde noticed that m ost of Divine Feline Ltd’s overhead costs are not volum e driven, and hence, she is contem plating on changing from a current conventional costing system to an Activity Based Costing (ABC) sy stem. As this is a big change, she has decided to test the concepts of ABC on its largest product, Fussy Kitten. The following information has been provided for the month of June 2007: Costing Information Fussy Kitten Devine Cat Gourmet Cat Total Number of boxes produced 800 600 600 2000 Conventional Costing Fussy Kitten Devine Cat Gourmet Cat Total Direct Materials 56,000.00 42,000.00 42,000.00 140,000.00 Direct Labour 32,000.00 24,000.00 24,000.00 80,000.00 Overhead Cost applied * 11,440.00 8,580.00 8,580.00 28,600.00 Total Manufacturing Cost 99,440.00 74,580.00 74,580.00 248,600.00 Cost per box of cat food $124.30 $124.30 $124.30 *Overhead = $28,600; allocated on the basis of number of boxes of cat food produced Resource information for Activity Based Costing:
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This note was uploaded on 01/31/2012 for the course ACCT acct taught by Professor A during the Three '11 term at University of New South Wales.

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SolnsMidsem2009_3 - Mid-session Practice Questions and...

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