Part 5 Overhead costs (15 marks) A company produces two products in one department....
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Accounting
Part 5 Overhead costs (15 marks)
A company produces two products in one department. Forecast data concerning the products for the next accounting period are shown as following tables.
| Product X | Product Y | |
| Forecast output (units) | 100 | 300 |
| Machine hours per unit | 1 | 3 |
| Number of customer orders | 30 | 70 |
| Number of quality control inspections | 20 | 30 |
| Cost pools | Cost amount ($) | Cost driver |
| Machine operating | 10,000 | Machine hours |
| Order processing | 2,000 | Number of customer orders |
| Quality control | 1,000 | Number of quality control inspections |
Required:
Calculate the overhead cost to be absorbed by each of the products, using an activity-based method (using the relevant cost drivers to trace overhead costs to the individual products).
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