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Acct. Assign

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  • 1. Aveery Ltd. Manufactures the following two component parts for the television industry:- Tvez : Annual production and sales of 50000 units at a selling price of Rs.40.60 per unit. Premia : Annual production and sales of 25000 units at a selling price of Rs. 60 per unit. A very includes all R&D and design costs in engineering costs.There is no marketing,distribution or customer service cost. The Particulars Tvez (Rs) Premia9Rs.) Total (Rs.) Direct material costs (variable) 850000 600000 1450000 Direct manufacturing labor costs (variable) 300000 200000 500000 Diret machining costs(see note) 150000 100000 250000 Indirect manufacturing costs Machine setup costs 86250 Testing costs 487500 Engineering costs 450000 Total costs 3223750 Note:- Direct machining costs represent cost of machine capacity dedicated to production of each product.These costs are fix Avery management identified the following activity cost pools,cost drivers for each activity and cost per unit of cost driver for Manufacturing Activity Description of activity Cost Driver Cost per unit of cost driver Preparing machine to manufacture new batch of Rs. 25 per set Set up products Set up hours up hour Testing components and final Rs 2 per Testing product Testing hours testing hour Costs are Complexity of assigned to product and product by Engineering processes special study Additional information is as below: Particulars Tvez Premia Production batch sizes 500 units 200 units Set up time per batch 12 hours 18 hours Testing and inspection time per unit of product produced 2.5 hours 4.75 hours Engineering costs incurred on each product Rs. 170000 Rs. 280000
  • 2. ustomer service cost. The direct and indirest costs incurred by Avery on Tvez and Premia are as follows:- roduct.These costs are fixed and are not expected to vary over long term horizon. per unit of cost driver for each overhead cost pool:

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