Naturelle AG has a factory in France producing two aromatherapy oils: Bergamot for the morning and Lavender
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Naturelle AG has a factory in France producing two aromatherapy oils: Bergamot for the morning and Lavender for the evening. The most significant costs incurred by the company relate to the packaging and marketing of the products. The chief accountant has attended a seminar on ABC and has decided that it would be beneficial to implement it. The following information relates to the production in the current period.
The following table shows the budgeted cost pools and drivers for the year.
Required
(a) Calculate the production cost per unit for each product.
(b) Discuss the decision of the chief accountant to adopt and implement ABC in the context of the available information.
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