ST plc produces three types of processed foods for a leading food retailer. The company has three processing departments (Preparation, Cooking and Packaging). After recognizing that the overheads incurred in these departments varied in relation to the activities performed, the company switched from a traditional absorption costing system to a budgetary control system that is based on activity based costing. The foods are processed in batches. The budgeted output for April was as follows:......................................................................... OutputFood A............................................................. 100 batchesFood B............................................................... 30 batchesFood C............................................................. 200 batchesThe number of activities and processing hours budgeted to process a batch of foods in each of the departments are as follows:

The budgeted departmental overhead costs for April were:............................................................... Overheads......................................................................   $Preparation.............................................. 100,000Cooking..................................................... 350,000Packaging.................................................... 50,000

Required:(a) For food A ONLY, calculate the budgeted overhead cost per batch:(i) using traditional absorption costing, based on a factory-wide absorption rate per processing hour; (ii) using activity based costing. (b) Comment briefly on the advantages of using an activity based costing approach to determining the cost of each type of processed food compared with traditional absorption costing approaches. You should make reference to your answers to requirement (a) where appropriate. (c) The actual output for April was:

..............................................................   OutputFood A................................................... 120 batchesFood B..................................................... 45 batchesFood C................................................... 167 batches

Prepare a flexed budget for April using an activity based costing approach. Your statement must show the total budgeted overhead for each department and the total budgeted overhead absorbed by each food.

(d) Discuss the advantages that ST plc should see from the activity based control system compared with the traditional absorption costing that it used previously.