5: Job + ABC costing [30 marks] Celebration Cakes, are a small boutique celebration cake making business located on the Gold Coast, Queensland, Australia. They currently use a job costing system to manage and track the cost of their cake orders. This month they are received three orders. Each cake order is tracked using a unique customer ID number. The materials and labour that have been used for each cake order is outlined below. Remember each order may include more than one cake. Cost Summary per Cake Order 8000 8001 8002 Total Direct Materials $200 $2000 $380 $2 580 Direct Labour $120 $500 $ 210. $ 830 The budgeted overhead cost for the business for the year is $5 000 and it is to be allocated based on total labour dollars. The budgeted total labour cost for the year is $10 000. 4. Celebration Cakes is trying to decide whether to use an ABC costing system to allocate its overhead costs. Based on the following cost allocation data in the table below calculate the allocation rates for the full year in the grey section (display 2 decimal places). [5 marks] Cost Driver Allocation Cost Activity Rate Electricity $1000 Total Number of cakes ordered 100 Indirect Materials $2 500 Indirect Labour $1500 Total Number of cakes ordered Labour Hours used 100 200 Total Overhead Costs $5.000 5. Then using the following activity data calculate the total overhead cost that would be allocated to each cake order (round to the nearest whole dollar). [7.5 marks] 8000 Allocation Rate 8001 8002 Number of cakes ordered $10 Number of cakes ordered. $25 Labour Hours used $7.5 225 10 6 10 6 30 15 2 Voice see Overhead Cost using ABC costing per Cake Order: Number of cakes ordered Number of cakes ordered Labour Hours used Total ABC Overhead Traditional Overhead 8000 8001 8002 Total 6. Which costing method would you recommend that they use? [2.5 marks]