Data for a Factory -
What Is the TA Ratio for Product B?

question 27

Multiple Choice

Data for a factory
$\begin{array}{ll}\text { Total factory cost } & £ 10,000 \\\text { Total time au ailable on key resource (hours) } & 2,500 \\\text { Contribution per unit product A } & £ 34.00 \\\text { Contribution per unit product B } & £ 30.00 \\\text { Contribution per unit product C } & £ 22.00 \\\text { Contribution per unit product D } & £ 20.00 \\\text { Hours required product A } & 12.0 \\\text { Hours required product B } & 6.0 \\\text { Hours required product C } & 6.0 \\\text { Hours required product D } & 8.0\end{array}$

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What is the TA ratio for product B?

• A)£0.625
• B)£0.917
• C)£1.250
• D)£0.708

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Definitions:

Overhead Applied

The process of assigning a portion of fixed and variable overhead costs to individual units of production based on a predetermined rate.

Activity-Based Costing

A methodology that assigns production costs to products based on the activities required to produce them, aiming to provide more accurate product costing.

Unit Product Cost

The total cost incurred to produce, store, and sell one unit of a product, including direct materials, direct labor, and allocated overhead.

Activity Rate

The cost driver rate used in activity-based costing to allocate costs more accurately to products or services based on specific activities.