Betta Ball Sports manufactures two products (Rubber Soccer Ball & Leather Soccer Ball) using the same machinery processes. You are provided with the following information relating to the existing production period Product Volume Material Cost per unit (R) Direct Labour Cost per unit (R) Machine Time per unit (hours) Rubber Ball 1 000 5.00 5.50 0.35 Leather Ball 700 20.00 2.00 1.00 Total production Overheads are as follows: Machine department: R50 000 (machine hours is the cost driver) Set‐up costs: R5 000 Ordering Costs‐materials: R2 000 Handling materials: R8 000 An analysis of production overhead activities for the period for the volume of products manufactured revealed the following: Product set-ups material orders times material were handled Rubber Ball 1 1 2 Leather Ball 2 1 3 Calculate the total budgeted product cost per unit for the Rubber Ball using Activity Based Costing (ABC). Round all answers to two decimal places.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Betta Ball Sports manufactures two products (Rubber Soccer Ball & Leather Soccer Ball) using the same machinery processes. You are provided with the following information relating to the existing production period
| Product | Volume | Material Cost per unit (R) | Direct Labour Cost per unit (R) | Machine Time per unit (hours) |
| Rubber Ball | 1 000 | 5.00 | 5.50 | 0.35 |
| Leather Ball | 700 | 20.00 | 2.00 | 1.00 |
Total production Overheads are as follows:
Machine department: R50 000 (machine hours is the cost driver)
Set‐up costs: R5 000
Ordering Costs‐materials: R2 000
Handling materials: R8 000
An analysis of production overhead activities for the period for the volume of
products manufactured revealed the following:
| Product | set-ups | material orders | times material were handled |
| Rubber Ball | 1 | 1 | 2 |
| Leather Ball | 2 | 1 | 3 |
Calculate the total budgeted product cost per unit for the Rubber Ball using
Activity Based Costing (ABC). Round all answers to two decimal places.
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