3 DD Company has two departments, Dept. A and Dept. You are provided the following costs for five activities that occur at the manufacturing plant every month: Activity Material handling (CH 7,2 Marks) Total Costs (SAR) Total number of units of Cost Driver 450,000 parts 110 employees 5.500 hours 315,000 Supervision of direct labor 180,000 Janitorial and cleaning 250,000 Machining 350,000 8,500 machine hours Total costs 1,095,000 The above activities are used by the two departments as follows: Material handling Department A Department B 220,000 parts 230,000 parts 45 employees 2.500 hours 3,000 hours Supervision of direct labor 65 employees Time spent cleaning Number of machine hours 6,000 machine hours 2.500 machine hours a. How much of the material handling cost will be allocated to Department A? b. What is the ABC allocation rate for supervision of direct labor? Answer: Q4. T&T produces product 'X' as a part of its main product. Each year, the company produces 75,000 units of product 'X'. The costs of production are mentioned below. An outside supplier has offered to deliver 75,000 units of product 'X' annually at a cost of $7.35 per unit. A fixed production cost of $ 120,000 is unavoidable for product 'X'. Should T&T Co. make or buy product 'X'? The production costs per unit for manufacturing a unit of product B are: Production Cost Amount (5) Direct Materials 2.55 Direct Labor 1.95 Variable Manufacturing Overhead 1.20 Answers: (CH 4,2 Marks) Q5. "ABC is a costing method that allocates overhead and indirect costs to related products and services." Comment on this statement and examine how ABC is used in the manufacturing sector with a suitable example. Mark) Answer: (CH 7,1