Aveery Ltd. Manufactures the following two component parts for the television industry:-Tvez : Annual production and sales of 50000 units at a selling price of Rs.40.60 per unit.Premia : Annual production and sales of 25000 units at a selling price of Rs. 60 per unit.A very includes all R&D and design costs in engineering costs.There is no marketing,distribution or customer service cost. The direct and indirest costs incurred by Avery on Tvez and Premia are as follows:-

Particulars Tvez (Rs) Premia9Rs.) Total (Rs.)Direct material costs (variable) 850000 600000 1450000Direct manufacturing labor costs (variable) 300000 200000 500000Diret machining costs(see note) 150000 100000 250000Indirect manufacturing costs Machine setup costs 86250 Testing costs 487500 Engineering costs 450000Total costs 3223750

Note:- Direct machining costs represent cost of machine capacity dedicated to production of each product.These costs are fixed and are not expected to vary over long term horizon.Avery management identified the following activity cost pools,cost drivers for each activity and cost per unit of cost driver for each overhead cost pool:

Manufacturing Activity Description of aCost Driver Cost per unit of cost driver

Set up Set up hours

Testing Testing hours

Engineering

Additional information is as below:Particulars Tvez PremiaProduction batch sizes 500 units 200 unitsSet up time per batch 12 hours 18 hoursTesting and inspection time per unit of product p 2.5 hours 4.75 hoursEngineering costs incurred on each product Rs. 170000 Rs. 280000

Preparing machine to manufacture new batch of products

Rs. 25 per set up hour

Testing components and final product

Rs 2 per testing hour

Complexity of product and processes

Costs are assigned to product by special study

A very includes all R&D and design costs in engineering costs.There is no marketing,distribution or customer service cost. The direct and indirest costs incurred by Avery on Tvez and Premia are as follows:-

Note:- Direct machining costs represent cost of machine capacity dedicated to production of each product.These costs are fixed and are not expected to vary over long term horizon.Avery management identified the following activity cost pools,cost drivers for each activity and cost per unit of cost driver for each overhead cost pool:

Cost per unit of cost driver