Wilcock & Co. is a firm of solicitors which currently operates an absorption costing system but is experimenting with an activity-based costing system. The current annual budget shows the following:

Wilcock & Co. absorbs overheads as a percentage of the total cost of direct labour and its standard profit margin is 40% of total cost. As part of the investigation into ABC, the solicitors wish to compare the two systems on a recently completed fraud case. The cost of solicitors’ time used directly on this case is £15,000.Their experimental ABC system is based on the following annual analysis:

The fraud case caused the following activities to happen:

Tasks:For the fraud case:1.  Calculate the absorption cost and selling price.2.  Calculate the activity-based cost and selling price.3.  Compare your findings and comment on them.