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Test 3

This document provides information about Godavari Engineering Ltd., which manufactures two types of machinery, Machine Y and Z. It includes budgeted overhead costs, direct labor hours, production volumes, direct material and labor costs, and activity costs and hours for order processing, machine processing, and product inspection. The task is to calculate the unit manufacturing cost of Machines Y and Z using activity-based costing, assuming the budgeted production volumes are achieved.

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63 views1 page

Test 3

This document provides information about Godavari Engineering Ltd., which manufactures two types of machinery, Machine Y and Z. It includes budgeted overhead costs, direct labor hours, production volumes, direct material and labor costs, and activity costs and hours for order processing, machine processing, and product inspection. The task is to calculate the unit manufacturing cost of Machines Y and Z using activity-based costing, assuming the budgeted production volumes are achieved.

Uploaded by

bando007
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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MA-2 Test-3 Marks:10 Time: 20 minutes


Godavari Engineering Ltd. Manufactures 2 types of machinery, i.e. machine Y and Z. The
budgeted overheads and direct labour hours for September, 2016 are Rs.12,42,500 and
20,000 hours respectively. The information about company’s products is as follows:
Machine Machine
Y Z
Budgeted Production 2500 units 3125 units
Volume
Direct material cost Rs.300/ unit Rs.450/unit
Direct Labour Cost per Unit
Y: 3 hours @ Rs.150/hour Rs.450
Y: 4 hours @ Rs.150/hour Rs.600
The company’s overheads of Rs.12,42,500 can be identified with three major activities:
Order processing Rs.2,10,000, machine processing Rs.8,75,000 and product inspection
Rs.1,57,500. These activities are driven by number of orders processed, machine hours
worked, and inspection hours respectively. The data relevant to these activities is as follows:
Machine Orders processed Machine hours Inspection hours
worked
Y 350 23,000 4,000
Z 250 27,000 11,000
Total 600 50,000 15,000

Assuming use of Activity Based Costing; calculate the unit manufacturing cost of Y and Z, if
budgeted manufacturing volume is achieved.

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