Question 2

# Question 2 - Question 2(a Calculate the total cost of each...

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Question 2 (a) Calculate the total cost of each product (assuming that the expected no. of units are produced) using the traditional costing system. Kamp Lamp No of units 40,000 units 28,000 units Direct Materials \$4,800,000 \$4,760,000 Direct Labour \$1,200,000 \$420,000 Overhead (2:1) \$4,000,000 \$1,400,000 Total Cost \$10,000,000 \$6,580,000 Direct Material: Kamp : 40,000units x \$120.00/units = \$4,800,000 Lamp : 28,000units x \$170.00/units = \$4,760,000 Overhead Overhead based on direct labour hours Kamp: 40,000units x 2DLH = \$80,000 Lamp : 28,000units x 1DLH = \$28,000 Total DLH = \$80,000 + \$ 28,000= \$108,000 \$5,40,000 = \$50/DLH 108,000 Kamp: 40,000units x 2 DLH x \$50./DLH = \$4,000,000 Lamp: 28,000units x 1DLH X \$50 /DLH = \$1,400,000

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b) Calculate the total cost of each product (assuming that the expected no. of units are produced) using the activity-based costing system. Kamp Lamp Direct Materials \$4,800,000 \$4,760,000 Direct Labour \$1,200,000 \$420,000 Manufacturing Overhead Energy \$760,050 \$3,040,200 Setup \$80,000 \$120,000 Rental \$350,000 \$1050,000 Total Cost \$7,190,050 \$9,390,200 Manufacturing Overhead 1) Energy (machine hour) : \$3,800,000 = \$50.67/MH 75,000 MH Kamp : 15,000MH x \$50.67/MH =
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• Spring '14
• Revenue, Generally Accepted Accounting Principles, minimum selling price, kamp

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