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Fast Heat Company makes two sizes of geysers: 150 litres and 250 litres. Budgeted annual...

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Accounting

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Fast Heat Company makes two sizes of geysers: 150 litres and 250 litres. Budgeted annual volumes are: 12 000 of the 150 litre model and 1 500 of the 250 litre model. They have traced overhead costs to four activity centres, and estimated annual cost and activity data for each centre as given in the following table. Activity Level of activity Cost driver activity Overhead cost 150 litre 250 litre (Rands) Purchasing No of purchase orders 800 400 252000 Planning No of production orders 400 500 648000 Quality control No of tests 900 600 1350000 Machine related No of machine hours 4000 1000 3750000 The following table gives direct costs of the two products. Product Costs 150 litre 250 litre Direct material R212 R284 Direct labour R80 R100 Required: Calculate the unit overhead and total cost of each size of geyser

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