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April 25, 2014

Homework Help: Management Accounting

Posted by A on Monday, March 12, 2007 at 7:19pm.

I really need help with this question. I keep doing it wrong so can anyone help me please.

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The maori novelty company makes a variety of souvenirs for visitors to New Zealand. The Otago division manufactures stuffed kiwi birds using a highly automated operation. A recently installed activity based costing system has four acitivities:



Activity CostDriver Rate



Materials handling Kilograms of materials $1.20 per kg

Production setup # of setup $60 per setup

Cuttting, sewing etc # of units $0.40 per unit

Packaging and shipping #of orders $10 per order



Two products are called Standard kiwi and giant kiwi. They require 0.20 and 0.40 kg, respectively, at a material cost of 1.30 for standard kiwis and 2.20 for giant kiwis. One computer controlled assembly line makes all the products. When a production run of a different product is started, a setup procedure is required to reprogram the computers and make other changes in the process. Products are packed and shipped separately so a request from a customer for, say, 3 different products is considered 3 different orders Ausiland Waterfront market just placed an order for 100 standard kiwis and 50 giant kiwis.


1. Suppose the products made for Ausiland Waterfront required AWM to be printed on each kiwi. Because of the automated process, printing the initials takes no extra time or materials but it requires a special production setup for each product. Compute the cost of production.

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