1 TRIPLE LIMITED Triple limited makes three types of gold watch -the Diva (D), the Classic (C) and the Power (P). A traditional product costing system is used at present, although an activity based on costing (ABC) system is being considered. Details of three products for a typical period are: Production Hours per unit Labour Machine hours hours 12 112 Materials Cost per unit(s) units Product D 20 750 172 12 1,250 Product C Product P 3 25 7,000 Direct labour cost 56 per hour and production overheads are absorbed on a machine hour basis. The overhead absorption rate for the period is $28 per machine hour. Required: (a) Calculate the cost per unit for each product using traditional method, absorption overhead on the basis of machine hours. Total production overheads are $654,500 and further analysis shows that the total production overheads can be divided as follows: Cost relating to set-ups Costs relating to machinery Costs relating to material handling Costs relating to inspection % 35 20 15 30 Total production overhead 100