460 B Question 4 Part a Crazy Ltd manufacture two types of bathroom suites: Contemporary and Utility. The directors have decided to use activity-based costing to account for the indirect costs of production. The following table shows the budget for the next financial year: Production output (units) Direct labour Contemporary Utility 150,000 50,000 300,000 100,000 100,000 30,000 Direct materials The indirect overhead costs have been identified with three cost drivers as shown below: Cost Driver Cost Assigned Activity Level Contemporary Utility Number of production runs 150,000 50 10 Number of quality tests 40,000 12 12 192 performed Number of deliveries made 20,000 75 25 Using activity-based costing calculate the total cost for each product and the cost per unit produced for each product. (8 marks) Outline two key advantages of Crazy Ltd adopting an activity-based costing system. (2 marks)