AstaPack manufactures medicines that are related to allergy sickness which is packaged into the Breathe product line and the TravelPack line.
The company sells large commercial containers of 1,200 capsules to health care facilities and travel packs of 40 capsules to shops in airports and hotels.
The finance manager has just returned from an ABC seminar and has been asked to assist in the development of an ABC system in the organization.
The following data are as follows:
|ACTIVITY |Estimated indirect activity cost|Allocation base |Estimated quantity of allocation| | |(cost pool) |(cost driver) |base | |Materials handling |RM200,000 |kg |25,000 kg | |Packaging |RM450,000 |Machine hours |2,500 hours | |Quality assurance |RM240,000 |Samples |3,000 samples | |Total indirect cost |RM890,000 | | |
The commercial container Breathe product line had a total weight of 11,000 kg, used 1,750 machine hours and 480 required samples. The TravelPack line had a total weight of 8,750 kg, used 580 machine hours and 690 required samples. The company produced 3,600 commercial containers of Breathe and 85,000 TravelPacks.
You are required to:
1. Compute the cost allocation rate for each activity. (6 marks)
| |Materials handling |Packaging |Quality assurance | |Estd indirect activity cost |200,000 |450,000 |240,000...