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MAC2601 ASSIFNMENT 2 SEMESTER 2

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  • September 16, 2022
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  • 2022/2023
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mammburundivhuwo
MAC2601
ASSIGNMENT 2(
ANSWERS
SEMESTER 2

ANSWERS

2022

#631559

, QUESTION 1

INDEPENDENT PART A

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

Rocky BMY
Machining costs
(2 623 050/375 x 150); (2 623 050/375 x 225) 1 049 220,00 1 573 830,00
Assembling costs
(2 250 000/37 x 7); (2 250 000/37 x 30) 425 675,68 1 824 324,32
Quality inspections
(5 265 000/75 x 15); (5 265 000/75 x 60) 1 053 000,00 4 212 000,00
Stores receiving costs
(2 610 000/1044 x 369); (2 610 000/1044 x 675) 922 500,00 1 687 500,00
Stores issues costs
(3 065 023/1630 x 650); (3 065 023/1630 x 980) 1 222 248,44 1 842 774,56
TOTAL 4 672 644,11 11 140 428,89

Overhead cost per unit
(4 672 644,11/826); (11 140 428,89/2 040) 5 656,95 5 460,99




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.
INDEPENDENT PART B




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