allocated to products using a single indirect eost pool, allocated based on direce thetrour hours. The indireet cost rate was \$1 is per direct labour hour The managers of Vines fetd decided to switeh from a manual system to sofwane programs that release materials and signal machines when to begin working. Simultarieousty, the company adopted an activity-based costing system. The manufacturing process bas been organised into sia activities, each with its own supervisor who is responsible for controlling costs. The following list indicates the acrivities, cost drivers and cost allocation rates. The company's information system automatically collects the necessary data for these sis activity areas. The data for two recent jobs follow: a. Suppose the company had not adopted an ABC System. Calculate manufacturing cost per unit for both jobs 410 and 411 b. Under new ABC system, calculate the manufacturing cost per unit for both jobs 410 and 41 c. Compare both costs from (a) and (b) for jobs 410 and 411 d. Identify advantage and disadvantages of adopting ABC System fou are currently planning the audit of Food Plus Pty Ltd (FPPL), a large proprietary company that operates a small chain of convenience stores. You are in the process of developing an understanding of its objectives and strategies and the related ousiness risks. Competition in this sector is intense, with major supermarket chains aggressively purchasing smaller rivals and discounting products below cost in order to increase market share. In order to compete, FPPL has been forced to offer value-added services such as complimentary coffees based on a loyalty scheme. While these strategies have helped to maintain its customer base, its gross margins have dropped by 10%. In an effort to increase profits, FPPL has recently focused on expanding the products available in each store. However, these items have achieved only limited acceptance to date among FPPL's customers and stock obsolescence is high. All of FPPL's premises are leased. Two of the leases are due to expire prior to the end of the current financial year. In both cases, the land on which the premises are situated has been re-zoned as residential. Due to "prior use" legislation, this does not prevent the premises from being used as a supermarket in the future. However, it does mean the land's value has increased and, on this basis, the lessor is demanding a 50% increase in rent. FPPL is also experiencing difficulties with two of its major suppliers, who have withdrawn their volume rebates and reduced payment terms from 30 to 14 days. In addition, FPPL has recently initiated legal action against a major supermarket chain for anti-competitive behaviour and predatory pricing. REQUIRED: (a)Identify three (3) business risks, which may lead to the risk of material misstatement at the financial statement level for FPPL. ( 3 marks) (b)For each business risk you identified in (a) above, identify the financial statement account at risk of misstatement. ( 3 marks) (c)For each business risk you identified in (a) above, describe how it may lead to the risk of material misstatement
