ABC Ltd intends to manufacture two distint products., Alpha and Beta. While the firm is capable of manufacturing both items, management is uncertain about the probability of either. The following are the budgeted figures:

Products Alpha Beta Sales expected $ 27,000 $100,000 Units of prdn. expected 1000 2,000 Expected costs $15 $20 Time required for Production 5hours 7.5hours Batch size 100 50

AS EXPECTED, ANNUAL OVERHEADS

Activity Cost driver Total for year Moulding mounding hours 2,000 Inspection Batches 150 prdn.mgmt products 20

Cost pool moulding P150,000 Inspection P75,000 Production management P125,000

REQUIRED (i) Costs and profits for each product should be calculated using the ABC Costing approach

(ii) Utilize Absorption costs to determine the profit for Alpha and in Beta . Overheads are absorbed on a per moulding hour basis. (6marks)