Reference no: EM132952994
Question: Activity-Based Costing
Peter Ltd produces two products, Small and Large. The company currently absorbs overheads on the basis of units produced, but they have read about a method based on activities undertaken and have asked you to help them investigate the method.
The output is Small 15,000 and Large 12,000.
The company has provided the following information;
Overhead activity Annual costs Cost driver Amount of activity
Small Large
Production £129,800 Machine hours 1260 1100
Quality inspection £58,080 No. of production runs 80 30
Material purchased £71,820 Purchase orders 30 12
Deliveries to retailers £18,080 Shipments 20 12
Produce a statement showing the overhead split using Activity Based Costing. Show the amount per unit produced.
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