5000 Al Majdi and Co provides the following information for the month of Dec 2003. The company is manufacturing three products: shirts, trousers and suits, Product Shirts Trousers Suits Total Output in units 300 150 250 700 Direct material cost Rial 3000 3000 10000 16000 Direct labour cost Rial 1000 1500 2500 Machine hours (per unit) 1 2 4 Labour hours (per unit) % 1 1% Factory overheads 5000 Maintenance expenses 4000 Material handling expenses 2000 Quality control expenses 2500 Packing and dispatch expenses 1000 The company is currently absorbing the production overheads on the basis of machine hour rate in order to find out the cost per unit. The market-selling price is pre determined for cach product. The owner of the company is not confident with the method of absorption that is being followed, as the profit margin is not satisfactory You have been approached in order to frame out an accurate method of absorption that will help them in maintaining a good profit margin. As a part of your work you have investigated the following details from the records that can be used for calculation of cost. The products are produced in batches of Shirts: 100 units, Trousers: 100 units and Suits: 50 units The products are sold in batches of Shirts: 40 units, Trousers: 30 units and Suits: 20 units The number of requisitions raised for raw material requirement on the stores: Shirts: 10 requisitions, Trousers: 10 requisitions and Suits: 10 requisitions The products are tested for quality control in batches of: Shirts: 20 units, Trousers: 40 units and Suits: 50 units You have also ascertained the cost drivers to be used: Cost Cost driver Factory overheads Machine hours Maintenance expenses Production runs Material handling expenses Requisitions raised Quality control expenses Quality check run Packing and dispatch expenses Orders executed Required: I To calculate the total costs for each product, using conventional cost mystem assuming that the overhead costs are absorbed on machine hour bus 11. To calculate the total costs for each product, using conventional cesting system assuming that the overhead costs are absorbed on labour hour basis III. To calculate the total costs for each product, using activity-based costing. IV. To calculate and list the unit product costs from the above figures to show the differences and to comment briefly on any conclusions, which may be drawn which could have pricing and profit implications