Cost and Management Accounting - Abc Ltd Has Collected the Following Data for Its Two Activities. It Calculates Activity Cost Rates Based on Cost Driver Capacity

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Cost and Management Accounting

1. X is the manufacture of Mumbai purchased three chemicals A, B and C from U.P.The bill gave the following information:

Chemical A: 6000 kgs @ Rs. 4.20 per kg Rs 25,200
Chemical B: 10000 kgs @ Rs. 3.80 per kg 38,000
Chemical C: 4000 kgs @ Rs. 4.75 per kg 19,000
VAT 2,055
Railway Freight 1,000
Total Cost 85,255

A shortage of 100 kgs in chemical A, of 140 Kgs in chemical B and Of 50 kgs in chemical C was noticed due to breakages. At Mumbai, the manufacture paid octroi duty @ 0.20 kg. He also paid hamali, Rs 20 for the chemical a, Rs 58.12 for chemical B and Rs 35.75 for chemical C. Calculate the stock rate that you would suggest for pricing issue of chemicals assuming a provision of 4 % towards further deterioration and also show the quantity (kgs) of chemicals available for issue.

2. ABC Ltd has collected the following data for its two activities. It calculates activity cost rates based on cost driver capacity.

Activity Cost driver Capacity Cost
Power Kilowatt hours 50000 hrs Kilowatt Rs 200000

Quality Inspection Numbers of inspection 10000 inspection Rs 300000

The Company makes three products, A, B and C.For the year ended March 31, 2004, the following consumption of cost drivers was reported:

Product Kilowatt-hours Quality Inspection
A 20000 7000
B 40000 5000
C 30000 6000

Compute the costs allocated to each product from each activity
Calculate the cost of unused capacity for each activity.

3. Reliable company wishes to discontinue the sale of one of the products in vew of unprofitable operations. Following details are available with regard to turnover, cost…...

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