Page 37 - PM Integrated Workbook 2018-19
P. 37
Advanced Costing Methods
Using ABC, overheads should be absorbed into products as follows:
Product ‘Tablet’ overhead cost = (Labour OAR $0.04 × 1 hour) + (Machine
maintenance OAR $0.36 × 4 hours)
Product ‘Tablet’ overhead cost = $0.04 + $1.44 = $1.48
Product ‘Phone’ overhead cost = (Labour OAR $0.04 × 4 hours) + (Machine
maintenance OAR $0.36 × 1 hour)
Product ‘Phone’ overhead cost = $0.16 + $0.36 = $0.52
Illustrations and further practice
Now read Illustrations 1 and 2, ‘Pen factories’ and ‘Saturn’, as well as Test Your
Understanding 1, ‘Cabal’.
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