Al Murabaa Ltd designs and produces vehicle parts. Al Murabaa using a simple normal costing system allocates manufacturing overhead to its three customers based on machine hours.

The controller of Al Murabaa Ltd, Mohamed Mesfer who has recently completed studies from UAE University is unhappy with the simple costing system and decides to implement an Activity Based Costing System. He knows that there are three main activities that consume overhead resources: design, production, and engineering. He collects the following data:

Required:

1. Compute the manufacturing overhead allocated to each customer using the current simple (traditional) system of cost allocation [2Marks].

2. Compute the amount of overhead allocated to each customer using ABC [3 Marks]

3. Explain FOUR ways that managers use the data from 2. (above) to improve their performance [2 Marks]

Question 4 Question One ICLO 11 7 Marks Al Murabas Uld designs and produces vehicle parts. Al Marabasing a simple normal costing system allocate mandaturing head to the customers based on machine hours The controllor of Al Murabaalid, Mohamed Master who has rely completed studies from UAE Unveily unhappy with the simple coling system and decides to implementan Activity Bed Com design, production and engineering. He collects the following data Usage of cost drivers by customer Activity Cost driver Manufacturing overbead 2007 Peugeot Mia Toyota Veid Motors Motors 1540.000 Tito poo Design Engineering Design boun Engineering hours 100 120 30 000 170 30 Production Machine nou 240.000 120 R200 100 Total 5310 000 Required 1. Compute the manufacturing overhead alocated to each customer using the current simple aditional system of cost location Maria 2. Compute the amount of overhead allocated to each customer using ABC [3 Marios 3. Explain FOUR ways that managers the data from 2 (above to improve their performance I Marka For the toolbar SAT-IPC) ALT-10 (Mach x X 0 o 1