Atharva Engineering Company Ltd.

, produces three products for which standard cost and

quantities per unit are as follows:
Products A B C

Output In units 10,000 20,000 30,000

Direct material In Rs. 50 40 32
per unit
Direct labour In Rs. 30 40 48
per unit
Labour hours 3 4 5
per unit
Machine hours 4 4 7
per unit
No. of purchase 600 900 1000
requisitions
No. of machine 120 130 150
set-ups

Production Overhead split by departments:

Department X- Rs.12,00,000; Y-Rs.15,00,000.
Department X is labour intensive and Y is machine intensive.
Total labour hours in Department X =2,00,000; Total machine hours in Department Y =
5,00,000.
Production overhead split by activity:
Receiving and Inspection – Rs.14,00,000 and Production scheduling/setup- Rs.13,00,000.
No. of batches received/inspected- 2500, No. of batches for scheduling/setup- 400.
Question:
a. Prepare cost statement under traditional absorption costing and activity based costing
methods. Also compare the result of the two methods and give your comments.