Question

Amben ltd a furniture production company has three production centers: Machine shop X, machine shop Y...

Amben ltd a furniture production company has three production centers: Machine shop X, machine shop Y and one assembly center. From the data below compute the overhead absorption rates for each center

Production center        Overhead        machine hours             labour hours

Machine shop X          $4,300,000     1,000,000                    500,000

Machine shop Y          $3,800,000     500,000                       1,000,000

Assembly                    $3,600,000     800,000                       1,200,000

Two products A and B were manufactured during the period:

Product A (100 units)                                                 $

Direct costs (100 units X $100)                                  10,000

Overheads:

            Machine center A. (5 machine hours)

            Machine center B.   (10 machine hours)

            Assembly                (10 direct labour hours)

Product B (200)

Direct costs (200 units $200)                                      40,000

Overheads:

            Machine center A. (10 machine hours)

            Machine center B.   (20 machine hours)

            Assembly                (20 direct labour hours)

Required:

Compute the total cost for each product

Compute the cost per unit for each product.

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