1
Q
Steps of current method/traditional costing
A
- Don’t know labour hours per unit then- (direct activity/£ per hour) x per activity time
- Then total budgeted activity = budgeted production units x above answer
- Otherwise do- production units x machine hours = total budgeted activity
- Total budgeted fixed overhead = all indirect production costs
- OAR= total budgeted fixed overhead/ total budgeted activity
2
Q
Layout of final table for traditional costing
A
A B C DM DL OH OAR X answer to first question TOTAL
3
Q
Steps for ABC method
A
- Cost drivers- production units/batch size= n of batches. N of batches x purchase order of batch= no of orders. Machine hours x sales volume= total machine hours (may already be in question)- include totals
- Cost driver rate=indirect production cost/ total cost driver
- Cost driver x cost driver rate for each cost pool. Add all up for A B C and do total column. Divide by sales volume to give OH cost per unit
4
Q
Prime cost is
A
DL+ DM x units
- added before dividing by sales volume to give OH cost per unit
5
Q
Standard costs equation for traditional method
A
DE + DM + DL + OH
6
Q
Standard cost equation for ABC method
A
DL + DE + DM
