Question

Trento Ltd. Currently manufacture 3 products, M, K and H. The relevant production information for one quarter is as follows: M K H Machine hours 15,000 23,000 38,000 Number of set-up 21 8 4 Number of orders 20 6 15 Fixed overhead costs amount to a total of 1,500,000 per quarter. The company is considering introducing Time-Driven Activity-Based Costing and have provided the following information: - They employ 35 workers. Each working 8 hours per day. There are 22 working days in the month. - Each set up takes 450 minutes of labour, each machine hour requires 10 minutes of labour time and each order takes 3,500 minutes of labour. Required: 1. Use Time Driven Time-Driven Activity-Based Costing to calculate the overheads allocated to each product per quarter. 2. Calculate and discuss the cost of the unused capacity.

          Trento Ltd. Currently manufacture 3 products, M, K and H. The relevant production information for one quarter is as follows:

                    M      K      H
Machine hours    15,000 23,000 38,000
Number of set-up   21     8      4
Number of orders   20     6     15

Fixed overhead costs amount to a total of 1,500,000 per quarter. The company is considering introducing Time-Driven Activity-Based Costing and have provided the following information:
- They employ 35 workers. Each working 8 hours per day. There are 22 working days in the month.
- Each set up takes 450 minutes of labour, each machine hour requires 10 minutes of labour time and each order takes 3,500 minutes of labour.

Required:
1. Use Time Driven Time-Driven Activity-Based Costing to calculate the overheads allocated to each product per quarter.
2. Calculate and discuss the cost of the unused capacity.

Trento Ltd. Currently manufacture 3 products, M, K and H. The relevant production information for one quarter is as follows:

M K H
Machine hours 15,000 23,000 38,000
Number of set-up 21 8 4
Number of orders 20 6 15

Fixed overhead costs amount to a total of 1,500,000 per quarter. The company is considering introducing Time-Driven Activity-Based Costing and have provided the following information:
- They employ 35 workers. Each working 8 hours per day. There are 22 working days in the month.
- Each set up takes 450 minutes of labour, each machine hour requires 10 minutes of labour time and each order takes 3,500 minutes of labour.

Required:
1. Use Time Driven Time-Driven Activity-Based Costing to calculate the overheads allocated to each product per quarter.
2. Calculate and discuss the cost of the unused capacity.

Added by Courtney M.

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