SIPPICAN CORPORATION

According to the activity based costing, the manufacturing overhead should be apportioned in
the following method
The Direct Material cost per unit and the direct labour cost per unit for the valves, pumps and
the flow controller is given below.
The total manufacturing overhead of $654600 should be apportioned based on the activity
required for manufacturing each of the valves, the pumps and the flow controller. The various
manufacturing overheads required for the production is given below for each of the products.
Now, we know the overheads required for each of the products. Thus, we shall now find out
the cost of each product based on the activity based costing. This can be found by including
the direct material cost and the direct labour cost for each of the product.
According to the traditional costing method and the ABC method, the cost of valves, pumps
and flow controller is given below.
The gross margins % of valves and pumps were at a higher value when the costing is done by
the ABC method. But, the flow controller is sold at a price lower than the cost price. Hence, it
is advisable to increase the price of the Flow Controller to at least $98.7981 to realize any
profit.
According to the activity based costing, the manufacturing overhead should be apportioned in
the following method
The Direct Material cost per unit and the direct labour cost per unit for the valves, pumps and
the flow controller is given below.
The total manufacturing overhead of $654600 should be apportioned based on the activity
required for manufacturing each of the valves, the pumps and the flow controller. The various
manufacturing overheads required for the production is given below for each of the products.
Now, we know the overheads required for each of the products. Thus, we shall now find out
the cost of each product based on the activity based costing. This can be found by including
the direct material cost and the direct labour cost for each of the product.
According to the traditional costing method and the ABC method, the cost of valves, pumps
and flow controller is given below.
The gross margins % of valves and pumps were at a higher value when the costing is done by
the ABC method. But, the flow controller is sold at a price lower than the cost price. Hence, it
is advisable to increase the price of the Flow Controller to at least $98.7981 to realize any
profit.
According to the activity based costing, the manufacturing overhead should be apportioned in
the following method
The Direct Material cost per unit and the direct labour cost per unit for the valves, pumps and
the flow controller is given below.
The total manufacturing overhead of $654600 should be apportioned based on the activity
required for manufacturing each of the valves, the pumps and the flow controller. The various
manufacturing overheads required for the production is given below for each of the products.

Now, we know the overheads required for each of the products. Thus, we shall now find out
the cost of each product based on the activity based costing. This can be found by including
the direct material cost and the direct labour cost for each of the product.
According to the traditional costing method and the ABC method, the cost of valves, pumps
and flow controller is given below.
The gross margins % of valves and pumps were at a higher value when the costing is done by
the ABC method. But, the flow controller is sold at a price lower than the cost price. Hence, it
is advisable to increase the price of the Flow Controller to at least $98.7981 to realize any
profit.
According to the activity based costing, the manufacturing overhead should be apportioned in
the following method
The Direct Material cost per unit and the direct labour cost per unit for the valves, pumps and
the flow controller is given below.
The total manufacturing overhead of $654600 should be apportioned based on the activity
required for manufacturing each of the valves, the pumps and the flow controller. The various
manufacturing overheads required for the production is given below for each of the products.
Now, we know the overheads required for each of the products. Thus, we shall now find out
the cost of each product based on the activity based costing. This can be found by including
the direct material cost and the direct labour cost for each of the product.
According to the traditional costing method and the ABC method, the cost of valves, pumps
and flow controller is given below.
The gross margins % of valves and pumps were at a higher value when the costing is done by
the ABC method. But, the flow controller is sold at a price lower than the cost price. Hence, it
is advisable to increase the price of the Flow Controller to at least $98.7981 to realize any
profit.