Question

Kumar & Sons Limited makes three products, using broadly the same production methods and equipment for each. A conventional (Traditional) product costing system is used at present, where manufacturing overhead is allocated using machine hour, a volume based driver.
Details of the three products for a typical period are:
Hours per unit Materials per unit
$ Volumes
(units)
Labour
Hours Machine Hours
Product X 0.5 1 16 600
Product Y 1.5 1 10 1,300
Product Z 1 2 20 7,000
Direct labour cost $7 per hour and production overheads are absorbed on a machine hour basis. The rate for the period is $25 per machine hour.
Recently, a competitor has operated in the market so the management accountant of Kumar & Sons has advised the management to consider using an activity-based costing (ABC) system. Upon the management’s approval, the management accountant was tasked to collect additional informatio

Answer 1

Answer:

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