A company manufactures products L and M using the same equipment and similar processes. An extract of the production data for these products in one...

      

A company manufactures products L and M using the same equipment and similar processes. An extract of the production data for these products in one period is as follows.
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Required:
Calculate the production overhead to be absorbed by one of each other product using the following costing methods.
(a) A traditional costing approach using direct labour hour rate to absorb overheat.
(b) An activity based costing approach using suitable cost drivers to trace overheads to products.

  

Answers


Wilfred
Solution
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- One product may require more machine hours and other may require more labours hours. Departmental or product evaluation will be difficult wrong estimates will be rejected in the whole organization.
Wilfykil answered the question on August 6, 2019 at 06:08


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