Assignment for ACC 420 FBC & ABC

Assignment for ACC 420 FBC & ABC

Question

Lotus Ltd has identified the following overhead costs and cost drivers for next year

Overhead Items E ( cost) $ Power 15000 Maintenance cost 7800 Ordering cost 6150 Set ups cost 4500 Cost Driver E( activity) Number of setups 400 Number of orders 4,000 Machine Hours 5,000 Kilowatt hours 52000

The following is one of the jobs completed during the year

Product A Product B Direct materials $1200 $1300 Hourly rate 25 30 Units completed 125 150 DLH 140 70 Number of setups 4 6 Number of orders 20 9 Machine hours 250 100 Kilowatt hours 75 48 Actual overhead $1500 $950

The company’s practical activity is 9800 machine hours

REQUIRED Part 1

1. Calculate the predetermined rate for the plant using FBC based on machine hours for each job

2. Calculate total product cost using FBC based on Machine hours for each job

3. Calculate the unit cost for each Product 4. Is the overhead over-applied or under-applied?

Part 2

5. Calculate the predetermined rate for the plant using ABC based on machine hours for each job

6. Calculate product cost under ABC. 7. Calculate the unit cost for each Product [ABC] 8. Is the overhead over-applied or under-applied under ABC? 9. Compare the result of FBC and ABC.