Java Ltd Manufactures Two Products, a and B

question 51

Multiple Choice

Java Ltd manufactures two products, A and B. The manufacturing processes for the two products are very similar. The following are excerpts from the product data for these two products for this year: Overhead costs total $285 000.
What is the cost per unit for each of A and B in respect of overhead costs using absorption costing, if costs are absorbed on the basis of direct labour hours?

• A) $15 and $30
• B) $1 and $2
• C) $16.96 and $23.75
• D) $38.86 and $12.95

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Outlay

The amount of money spent on a particular expense or investment.

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.

Cash Inflows

Money or other forms of financial assets that come into a company, contributing to its total revenue.