(a) What is job order costing? Explain the importance of job order costing. (b) Following are the particulars of an industry manufacturing two…
BBS Cost and Management Accounting · 2082 · Solved Question with Answer
(a) What is job order costing? Explain the importance of job order costing.
(b) Following are the particulars of an industry manufacturing two products X and Y .
| Product | Output in units | Machine hour per unit | No. of set ups | No. of Orders |
| X | 2,000 | 4 | 40 | 20 |
| Y | 4,000 | 3 | 60 | 30 |
The overhead cost and cost drivers are as follows:
| Activities | Cost drivers | Overheads |
| Volume related cost | Machine hours | Rs. 200,000 |
| Set ups cost | No. of set ups | Rs. 200,000 |
| Purchase related cost | No. of orders | Rs. 100,000 |
Required: Cost per unit under Activity Based Costing method.