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MAC2601 Assignment 2 Solutions Second Semester 2022

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This document contains a written assignment that is due on the 16th of September. It clearly shows all calculations and provides explanations

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  • September 5, 2022
  • 17
  • 2022/2023
  • Case
  • Mthombeni
  • A+

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MAC2601
ASSIGNMENT 2

SOLUTIONS




PREPARED BY: MTHOMBENI

0767297208

,QUESTION 1
INDEPENDENT PART A


(a) Calculate the manufacturing overheads per unit for both Rocky and BMY bikes
using activity-based costing.


Rocky BMY
Machine costs 1 049 220 1 573 830
2 623 050X150/375 2 623 050X225/375

Assembling costs 425 675,68 1 824 324,32
2 250 000X7/37 2 250 000X30/37

Quality inspections 1 053 000 4 212 000
5 265 000X15/75 5 265 000X60/75

Stores receiving costs 922 500 1 687 500
2 610 000X369/1044 2 610 000X675/1044

Stores issued costs 1 222 248,44 1 842 774,56
3 065 023X650/1630 3 065 023X980/1630

Total 4 672 644,11 11 140 428,89




Overhead cost per unit
Rocky (4 672 644,11/826) 5 656,95

BMY (11 140 428,89/2040) 5 460,99




1

, (b) Explain a difference between the traditional costing and activity-based costing
methods.
∙ Non-manufacturing (ie customer support costs), as well as manufacturing costs, may be
assigned to products for decision-making purposes (not for GAAP inventory valuation).
∙ A number of overhead activity cost pools are used, each of which is allocated to products
and other cost objects using ABC’s own unique measure of activity or driver.
∙ The allocation bases differ from those used in the traditional costing method.
∙ The activity rates may be based on the level of activity at normal capacity rather than on
the budgeted level of activity.




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