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CMA Intermediate · Management Accounting · Activity Based Costing

Gupta Fabrics Ltd has a setup pool of ₹2,40,000 and a packing pool of ₹1,80,000. Setup driver: 80 setups (Product X 20, Product Y 60). Packing driver: 600 packing orders (Product X 400, Product Y 200). What is the total overhead assigned to Product X?

Setup costs ₹3,000 per setup, so Product X gets ₹60,000 for 20 setups. Packing costs ₹300 per order, so X gets ₹1,20,000 for 400 orders. The total overhead assigned to Product X is ₹1,80,000.

  1. A₹1,20,000
  2. B₹1,80,000Correct
  3. C₹1,56,000
  4. D₹1,32,000

Explanation

Setup rate = 2,40,000/80 = ₹3,000; X = 20 × 3,000 = ₹60,000. Packing rate = 1,80,000/600 = ₹300; X = 400 × 300 = ₹1,20,000. Total X = ₹1,80,000. Check: Y = 1,80,000 + 60,000 = 2,40,000 and 1,80,000 + 2,40,000 = 4,20,000 total.

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