OL Ltd uses an activity-based management system. OL Ltd manufactures three products: the Alpha, the...
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OL Ltd uses an activitybased management system. OL Ltd manufactures three products: the Alpha, the Beta and the Gamma. Alphas and Betas are manufactured in batches of ten units. Typical monthly production and cost data from the quality control department are provided as follows: Alpha, units; Beta, units; and Gamma, units. Setting up test equipment costs R per month. Inspection costs are R per month. Every unit must be inspected by the Quality Control department. The Gamma is a highvalue product. It is manufactured to order, and in single units. It is not possible to manufacture more than one Gamma per day. The test equipment must be set up differently for each product. Once set up the equipment can test up to ten units before it needs to be recalibrated, and a set up cannot last more than one day. Each Alpha and Beta requires the same amount of inspection. Each unit of Gamma requires twice as much inspection time. What is the cost per unit of quality control for each unit of Gamma, under an activitybased management approach? a R b R c R d R
OL Ltd uses an activitybased management system. OL Ltd manufactures three products: the Alpha, the Beta and the Gamma. Alphas and Betas are manufactured in batches of ten units. Typical monthly production and cost data from the quality control department are provided as follows: Alpha, units; Beta, units; and Gamma, units. Setting up test equipment costs R per month. Inspection costs are R per month. Every unit must be inspected by the Quality Control department. The Gamma is a highvalue product. It is manufactured to order, and in single units. It is not possible to manufacture more than one Gamma per day. The test equipment must be set up differently for each product. Once set up the equipment can test up to ten units before it needs to be recalibrated, and a set up cannot last more than one day. Each Alpha and Beta requires the same amount of inspection. Each unit of Gamma requires twice as much inspection time. What is the cost per unit of quality control for each unit of Gamma, under an activitybased management approach?
a
R
b
R
c
R
d
R
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