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ITC EXAM PREP
ABC – example 1
Feline Pixels (Pty) Ltd provides the following information concerning its two product lines:
Total budgeted machine setup-related cost – R42 000
Required:
(a) Calculate how much machine setup-related cost is allocated to each of A and B’s
product lines if Feline Pixels (Pty) Ltd uses a traditional cost allocation system based
on direct labour hours. Calculate the fixed overhead cost per unit for Product A and
B.
(b) Calculate how much machine setup-related cost is allocated to each of A and B’s
product lines if Feline Pixels (Pty) Ltd uses activity-based costing (ABC). Calculate the
fixed overhead cost per unit for Product A and B.
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