Asteroid produces and sells mountain bikes and has four keys products. this year, for the first time,it is operating an activity based costing system in parallel with its long-standing traditional costing system (which absorbs overheads on a machine hour basis). the planned production activity-based cost pools and cost driver activity levels for all the output for the year are as follow: Activity Cost Pool Activity Level Purchasing materials 750.000 5000 purchase orders Storing materials 800.000 1600 issue notes Setting up machinery 600.000 600 set-ups Running machinery 990.000 10.000 machine hours Total production overheads 3140.000 An analysis of actual production output for its two star products shows the following figures: Activity Tour Giro Units produced 1500 800 Purchase orders 1500 500 Store issue notes 800 400 Set-ups 235 100 Machine Hours 4000 3000 furthermore, cost in euro for direct material and hour for these two models are as follow: Tour Giro Direct materials costs 150.000euro 60.000 euro Direct Labour costs 700.000euro 110.500 euro Calculate the total production cost of both products ‘Tour’ and ‘Giro; using: a. Traditional costing system approach b. Activity based costing approach

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter20: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2E: Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each...

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Asteroid produces and sells mountain bikes and has four keys products. this year, for the first time,it is operating an activity based costing system in parallel with its long-standing traditional costing system (which absorbs overheads on a machine hour basis). the planned production activity-based cost pools and cost driver activity levels for all the output for the year are as follow:

Activity	Cost Pool	Activity Level
Purchasing materials	750.000	5000 purchase orders
Storing materials	800.000	1600 issue notes
Setting up machinery	600.000	600 set-ups
Running machinery	990.000	10.000 machine hours
Total production overheads	3140.000