Management accounting Assignment Example | Topics and Well Written Essays - 2000 words

Management accounting - Assignment ExampleThese amount bash costs argon then divided by the total number of labour hours to obtain the budgeted factory over head rate. That rate is multiplied by the number of hours to complete one social unit of Vivaldehyde and Kathanol in bless to determine Factory Overhead Rate per unit of Vivaldehyde and Kathanol. These FOH rates are then multiplied by the total number of units of both Vivaldehyde and Kathanol to obtain perfect Factory Overhead costs.Similarly, total number of units produced was then multiplied by learn material cost per unit and direct labour cost per unit in order to calculate total direct material cost and total labour cost respectively. Per unit direct material cost, per unit direct labour cost and per unit factory overhead cost were then added to get the total per unit cost of both products. 40% mark-up was then added on the total per unit costs of both the products in order to arrive at the selling prices for both of t he products. legal action Based Costing is the technique that is employ due to the lack of appropriateness of the traditional Absorption Costing. For Activity Based Costing, in the first step the relevant cost drivers and their total legal action levels are identified which cause the factory overheads to incur.Total factory overhead costs of every department are then divided by the relevant legal action level of each cost drivers to find out the activity rates. Those activity rates are then multiplied by the exact level of activity consumed by each product to obtain the factory overhead cost incurred by the each product. In this way, the factory overhead rate is calculated. Factory overhead rate along with direct material per unit as well as direct labour per unit are then added up to clear at the total cost per unit of both Vivaldehyde and Kathanol.Total Factory Overhead Costs of both products are having different values in Activity Based Costing than those of Absorption Cost d ue to