Question
QUESTION 3  
QUESTION 3
ACB Company has three types of product departments (Milk, Yogurt and Cheese) with the following information:
|
Milk |
Yogurt |
Cheese |
Total |
||
|
Number of advertisements |
40 |
40 |
70 |
150 |
|
|
Number of Customer Orders |
1400 |
800 |
1300 |
3,500 |
|
|
Number of km driven |
90,000 |
60,000 |
30,000 |
180,000 |
|
The business also has overhead costs as follows:
|
Activity |
Costs per activity AED |
Cost driver |
|
Maintenance vehicle |
AED 38,000,000 |
Number of km driven |
|
Admin cost customer orders |
AED 420,200 |
Number of customers orders |
|
Advertising |
AED 610,000 |
Number of advertisements |
- Determine the cost of each of the company's segments under the traditional costing system in which it applies total manufacturing overhead of AED 37,213,200.00 using a predetermined overhead rate based on number of customer orders.
- If the company considering using a variation of activity-based costing to determine its segments costs for external reports. Determine the cost of each of the company's three segments under activity-based costing system.
Homework Answers
Answer #1
1. Cost of each of the company's segments under the traditional costing system in which it applies total manufacturing overhead of AED 37,213,200.00 using a predetermined overhead rate based on number of customer orders:
2. Cost of each of the company's three segments under activity-based costing system:
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