a. Write down the limitations of cost volume profit analysis.b. A company produces two products A and B. Both products are produced on the same…
BBS Cost and Management Accounting · 2078 · Solved Question with Answer
a. Write down the limitations of cost volume profit analysis.b. 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 X | Product Y | |
| Outputs in units | 2,000 | 4,000 |
| Machine hour per unit | 4 | 3 |
| No.of Purchase Orders | 20 | 30 |
| No.of Set-ups | 80 | 120 |
The indirect cost of the different activities is Rs. 500,000 which is apportioned as follows:
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Volume Related 40%
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Purchase Related 40%
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Set-up Related 20%
Required : Cost Per Unit under Activity Based Costing Method