A business manufactures three similar products Basic, Standard and Luxury. There is a special part required in all products that require delicate handling. The basic and standard products require one each whilst the luxury product requires two. All of the products are made in batches with larger batches for Basic and Standard and smaller batches for Luxury. Each new batch requires production facilities 'set-ups'. Details of the three productions are: Basic 14,000 49 700 Standard 12,000 59 300 1.5 11 12 Annual production and sales -units Sales price per unit () Manufacturing batch size - units Direct labour time per unit - hours Direct labour rate per hour () Direct material cost per unit () Number of special parts per unit Number of set-ups per batch Number of separate material issues from stores per batch Number of sales invoices issued per year 1 Luxury 10,000 69 50 2.5 11 14 2 4 11 10 1 2 2 I 1 1 70 60 250 An analysis of the overhead costs for the company has provided the following information. Overhead cost analysis Set-up cost Special part handling cost Customer invoicing cost Material handling cost Other overheads 60.000 50.000 25.000 45.000 130.000 Cost driver Number of set-ups Number of special parts Number of invoices Number of batches Labour hours Required: a) Calculate the profit per unit using activity-based costing. (25 marks) b) Describe and evaluate the Activity-Based Costing methodology. MacBook Air 80 F3 DIL F4 F5 F6 F7 F8 F9 F10 $ % 1 & * # 1