(a) A company produces two products: A and B. Both products are produced on the same equipment and use similar processes. The information for output…
BBS Cost and Management Accounting · 2081 · Solved Question with Answer
(a) A company produces two products: A and B. Both products are produced on the same equipment and use similar processes. The information for output and the cost of activities are given below:
| Product A | Product B | |
| Output in units | 10,000 | 12,000 |
| Machine hour used | 12,000 | 15,000 |
| No. of Purchased Order | 50 | 60 |
| No. of Set-Ups | 4 | 6 |
The indirect cost of the different activities are as follows:
Volume related cost: 68,000
Purchase related cost: 55,000
Set up related cost: 30,000
Required: Cost per unit under activity-based costing method.
b) What is job order costing? Why is it needed?