GROUP 10 CASE

VOLUME-AND ACTIVITY-BASED PROCESS COSTING

Padang Sun Shine Inc. produces HVS paper and products are processed through 2 Department: Dept. A
and Dept. B.
20.000 reams of 60 gram HVS paper in Dept. A are completed and transferred to Dept. B at unit cost of
Rp 1.000. In Dept. B, there are 500 abnormal spoiled units, and 400 lost units in the beginning of
process. Additional units due to additional raw materials are 5.400 units. Beginning WIP (100% RMC, 3/4
CC) are 4.000 units and ending WIP (60% RMC, 1/5 CC) 5.000 units. Costs of beginning WIP related to 60
gram HVS paper are as follows:
Cost from A Rp 1.000.000
RMC 1.200.000
LC 1.300.000
FOH 1.500.000
Total Rp 5.000.000

In the current period, 60 gram HVS paper uses raw material cost for Rp 8.000.000 and labor cost for Rp
7.000.000. The FOH for period is as follows:
Setup cost Rp 500.000
Inspection cost 800.000
Purchasing cost 700.000
Total Rp 2.000.000

FOH activities for period are as follows:

60 gram HVS paper 70 gram HVS paper 80 gram HVS paper Total
Setup hours 25 35 40 100
Inspection hours 125 175 200 500
No. of orders 5 6 9 20
Machine hours 400 600 1.500 2.500

Required:
a. Prepare cost of production report for 60 gram HVS paper using FIFO and VBC approach
b. Prepare cost of production report for 60 gram HVS paper using FIFO and ABC approach
c. Please give comment for costing approach above