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ACTIVITY BASED COSTING
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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