Samuelson uses activity-based costing. The company manufactures two products, X and Y. The annual production and sales of Product X are 3,000 units and of Product Y 2,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows:

a Calculate the overhead cost per unit of Product X and Y under activity based costing.

b Samuelson wishes to contrast its overhead allocation with that under the traditional costing method it previously used. Samuelson charged its overheads of £59,000 to products in proportion to machine hours. Each unit of X and Y consumed five machine hours in production. Calculate the overhead cost per unit of Product X and Y under the traditional method of overhead allocation.

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Expected activity Cost Estimated pool cost X Y Total Activity 1 12,000 300 500 800 Activity 2 15,000 100 400 500 Activity 3 32,000 400 1200 1600 Total costs 59,000