1. COSTING QUESTION A firm manufactures tables and wants to establish the cost per unit using absorption costing. It knows its fixed production overheads amount to 50,000 per year and it makes 25,000 tables per year. 18 MARKS The direct costs allocated to each saw are 12, the firm can use 5,000 labour hours and 2,500 machine hours on table production. The firm's management must decide how to absorb the overhead cost into the cost of each unit. This will help them establish the actual cost of producing a table. The three main methods used are output, labor hours and machine hours. Calculate the cost per unit using each of these three methods. 2. FLEXIBLE BUDGET QUESTION 30 MARKS Given the following cost items, classify each item's cost type and then prepare the flex budget for an activity level of 100,000 units. BUDGET FOR THE YEAR 2023 Production Units Direct labor Direct material Rent Maintenance Administration Royalties 25% 25,000 125,000 150,000 120,000 100,000 50,000 17,500 75% 75,000 375,000 450,000 120,000 200,000 50,000 42,500