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Question 1C ABC Company has been traditionally allocating indirect costs based...

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Accounting

Question 1C
ABC Company has been traditionally allocating indirect costs based on budgeted labor hours. ABC's total indirect costs amounted to INR 450,000. ABC produces three products, X, Y, and Z. Key production and sales details associated with the three products are as follows:
\table[[,A,B,C],[Direct Material (DM),180000,160000,200000],[Direct Labor (DL),240000,360000,180000],[DM Rate p.u.,3,4,10],[DL Rate per hour,8,6,9],[Setup hours,200,200,600],[Kw Hrs,600,600,800],[Units sold,1000,3000,2000],[Selling Price p.u.,400,400,200]]
ABC Inc. decided to shift to an Activity Based Cost allocation method. A breakup of the indirect costs and their drivers is provided in the below given table.
\table[[,Cost,Driver],[Machine Set-up,200000,Set up Time],[Material Handling,100000,DM Units],[Electricity,100000,Kw Hrs],[Quality Control,50000,Sales Value]]
Find the profit for each product based on both traditional approach and activity-based approach to allocating indirect cost to products. Show all the workings
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