1. Realwood Pty Ltd manufactures two types of timber felling machines - Toppler and Muncher. The company is currently us

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1 Realwood Pty Ltd Manufactures Two Types Of Timber Felling Machines Toppler And Muncher The Company Is Currently Us 1 (257.22 KiB) Viewed 38 times

1. Realwood Pty Ltd manufactures two types of timber felling machines - Toppler and Muncher. The company is currently using a traditional costing system with machine hours as the cost driver. The company is considering whether to use the activity-based costing (ABC) method to allocate overhead costs to products. Budgeted overhead costs of the upcoming accounting period follow: Activity Total budgeted activity cost $55 000 Warehousing $47 000 Machine maintenance Setup Activity driver Budgeted level for activity driver Number of material 550 moves moves Number of 16 000 hours machine hours Number of 400 runs production runs $250 000 Information for the two products completed during the period is as follows: Muncher Toppler Number of material moves 320 280 Number of production runs 60 100 Total machine hours 10500 5500 Units completed 3000 1000 Direct material cost per unit $20 $35 Direct labour cost per unit $40 $70 Required: a) Calculate the unit cost of each product if the conventional costing approach is used. b) Determine the cost of producing each product if activity-based costing is used.