The best is via overheading cost calculation which gives best accurate costing

Volume based costing- fixed and varaible-cost depends on volume

ABC- FOCUS ON ACTIVITIES------------are these two different frameworks when and where to use which framework.

Expenses are consumed by products.- managing expenses and managing cost

Acivities:
Unit level--- everytime you sell a product--you accure a cost.---------then drivers will be your part of conversation
batch level- example of classroom for students
Product level- different product different cost like executive an mdc example
Customer level- customer specific for services asked by custimer so they should only be charged for
Facility level -

Relationship between actvities and product

Activity based AbR= activity OH/Activity driver

TC=prime cost+(activity based AbR*Activity consumed)

Activities
Values adding activities
Other
hich activities to focus
Activites se aapko samjh aata hai konsa lena hai kitna %

IF A SINGLE PRODUCT HAS VARIOUS ACTVITIES WHAT IS THE USE:

CUSTOMER SENGEMENT IS DIFFERENT SO ACTIVITIES CAN HELP IN COSTING
REDUCE NONE REQUIRED ACTIVITIES
use which framework.

art of conversation

ed for
 Question- 1
NM ltd. produces and sells toys using a special type of local wood.
Standard Toy: 90,000 units sold @ Rs. 60 per unit (market price)
Premium Toy: 10,000 units sold @ Rs. 80 per unit (market price)
Cost information is given below:
Material
Standard Toy: Rs. 10.80 per unit
Premium Toy: Rs. 24 per unit
Labour:
Standard Toy: Rs. 12 per unit
Premium Toy: Rs. 14.40 per unit
Manufacturing overheads
Manufacturing overheads are absorbed on the basis of units produced = Rs. 35 per unit
Selling and Admin overheads
SAO are absorbed as a percentage of revenue: 4%
Required
Cost, Profit, Return on sales
The company is planning to reduce the sale of Product Standard and increase the sales of Product
Premium. Comment
Will your answer change with the following additional information
A detailed examination of the overheads gave the following additional information
Manufacturing overheads
Toys are produced in batches.
Standard: 500 units are produced in one batch
Premium: 250 units are produced in one batch
40% of the manufacturing overheads are spent on machine setting.
Rest can be absorbed on the basis of units produced
Selling overheads account for 70% of the total non-manufacturing overheads.
10 sales visits are required to sell 1000 units of product Standard.
25 sales visits are required to sell 1000 units of product Premium.
Administration overheads: Rest of the non-manufacturing overheads related to the administration.
Cost Sheet Total CPU(S) CPU(P)
Units 90,000 10,000
SP 60 80
DM 972,000 972,000
240,000 24
DL 1,080,000 12
144,000 14
Prime cost 2,436,000
MO 3,500,000 3,150,000 350,000
NMO 248,000 216,000 32,000
Total OH 3,748,000
Total Cost 6,184,000
Sales 6,200,000 5,400,000 800,000
Profit 16,000
ROS 0.258%
 Question- 1
NM ltd. produces and sells toys using a special type of local wood.
Standard Toy: 90,000 units sold @ Rs. 60 per unit (market price)
Premium Toy: 10,000 units sold @ Rs. 80 per unit (market price)
Cost information is given below:
Material
Standard Toy: Rs. 10.80 per unit
Premium Toy: Rs. 24 per unit
Labour:
Standard Toy: Rs. 12 per unit
Premium Toy: Rs. 14.40 per unit
Manufacturing overheads
Manufacturing overheads are absorbed on the basis of units produced = Rs. 35 per unit
Selling and Admin overheads
SAO are absorbed as a percentage of revenue: 4%
Required
Cost, Profit, Return on sales
The company is planning to reduce the sale of Product Standard and increase the sales of Product
Premium. Comment
Will your answer change with the following additional information
A detailed examination of the overheads gave the following additional information
Manufacturing overheads
Toys are produced in batches.
Standard: 500 units are produced in one batch
Premium: 250 units are produced in one batch
40% of the manufacturing overheads are spent on machine setting.
Rest can be absorbed on the basis of units produced
Selling overheads account for 70% of the total non-manufacturing overheads.
10 sales visits are required to sell 1000 units of product Standard.
25 sales visits are required to sell 1000 units of product Premium.
Administration overheads: Rest of the non-manufacturing overheads related to the administration.
 Cost Sheet
S P TOTAL
Units 90000 10000 100000
SP 60 80
DM 972000 240000 1212000
DL 1080000 144000 1224000 3500000
Prime cost 2052000 384000 2436000
MO 3150000 350000 3500000
NMO 216000 32000 248000
Total OH 3366000 382000 3748000
Total Cost 5418000 766000 6184000
Sales 5400000 800000 6200000
Profit -18000 34000 16000
ROS -0.33% 4% 0.258%

210000
21 Revised Cost Sheet
1890000 S P TOTAL
1400000 Units 90000 10000 100000
220 SP 60 80
6363.63636363636 DM 972000 240000 1212000
1145454.54545455 DL 1080000 144000 1224000
254545.454545455 Prime cost 2052000 384000 2436000
2100000 MO 3500000
abr * service used Machine setting 1145454.55 254545.45454545 1400000
Others 1890000 210000 2100000
NMO 248000
1150
173600 ADO 66960.00 7440 74400.00
150.95652173913 SO 135860.87 37739.130434783 173600
135860.869565217 Total OH 3238275.42 509724.58 3748000.00
37739.1304347826 Sales 5400000 800000 6200000
Total Cost 5290275.42 893724.58 6184000.00
Profit 109724.58 -93724.58 16000.00
ROS 2.03% -11.72% 0.26%
INCRESE THE PRICE
WRONG COSTING HAPPENDED DUE TO WRONG PRICING-
 35

Working Notes
No of standard batch 180
No of premium batch 40
Maching setting 1400000
Other 2100000
Driver is no of batchs
Standard Premium
180 40 220
AbR 6363.636 To set machine to run one batch this is the seting you are take
AbR 21 Abr per unit

No of Standard visits 900

No of Premium visits 250
Visiting cost 173600
Driver is no of visits
Standard Premium
900 250 1150
AbR (so) 151 For each visit this the cost required
AbR (ado) 0.744
E TO WRONG PRICING-