Activity-Based Costing (Q1, 2020-2021) MA Pic provides packed meals delivered to the doorstep in the neighbourhood of Jalil City. The company offers its products in a package which includes main course, dessert and a drink. The company uses a few digital platforms to take orders and has been doing well with a good customer base. Since January 2020, MA Plc has experienced an exponential growth in business when the city was under a movement control to curb the covid pandemic situation. The company has been striving to cope with the market demand and the rather short cycle time to deliver packed meals once orders have been received from customers. One of the key initiatives made by the company is to mechanise some of its processes by introducing numerous automated kitchen equipment to replace labour work. To maintain quality of the products, standard operating procedures (SOPs) have been developed and implemented as a matter of policy. Some workers have since been transferred to the inspection stations to check on the quality of the meals before they leave the company's kitchen. During the recent management meeting, there was some discussions about one of the company's product, "Lady@Lunch", Lady@Lunch is targeted at working women who now needs to work from home and struggling to cook over the short lunch break. A recent review of the market responses suggests that the product is not achieving the sales revenue as expected. The marketing director is of the view that the product is priced too high compared to some of the players in the market. The kitchen director however, feels that the price is deemed appropriate to recover the kitchen overhead costs required to produce Lady Lunch. The company operates a traditional overhead costing system and uses the direct labour hours to allocate its overhead costs. As the management accountant in the company, you have called upon your team to work with the kitchen team to gather more details to better understand the kitchen overhead costs. The following information about the resources and associated costs has been budgeted for January 2021. Total meals Direct labour hours per meal Contribution per meal Lady Lunch Other Products 4,270 9,880 0.13 0.15 E6 E4 Activity Budget costs Cost Driver Projection of Cost Drivers Lady@Lunch Other Products Preparation Set up Cooking Packing Inspection 93,600 Number of parts per meal 5,500 Number of set ups 75,200 Equipment hours per meal 14,800 Number of orders delivered 3,800 Number of inspections 5 7 920 4,870 0.25 0.42 1,680 460 8,300 1,280 REQUIRED: (e) Calculate the overhead cost per unit of the new product, Lady Lunch, using (i) Traditional overhead costing approach [6 marks] (ii) Activity-based costing approach [14 marks] (20 marks)