7 Question 4 (answer all parts of the question) Housing Ltd manufactures a range of products used in the building industry. Manufacturing is undertaken using one of two processes: the A Process and the B Process. All of the products are manufactured in batches. The current pricing policy has been to absorb all overheads using direct labour hours to obtain total cost. Price is then calculated as total cost plus a 35 per cent mark-up. A recent detailed analysis has examined overhead cost; the results are: A Process cost B Process cost Set-up cost Handling charges Other overheads Total overhead costs Analysis of overhead costs Cost per month () Monthly volume () 96,000 480 hours 44,800 1,280 hours 42,900 260 set-ups 45,600 380 movements 50,700 (see below) 280,000 There are 4,000 direct labour hours available each month. Two of Housing Ltd products are (Product 1) and (Product 2). Product 1 is produced by the A Process in a simple operation. Product B is manufactured by the B Process, a more complex operation with more production stages. Both products are sold by the metre. Details of the two products are: Monthly volume Batch size Processing time per batch A Process Prasace Product 1 Product 2 1,000 metres 500 metres 1,000 metres 50 metres 100 hours 25 hours