Assignment Question(s) (Allotted Marks: 15/15) Question 1: ABC manufactures two products, A and B. Both the products uses the same type of materials and direct labour but in different quantities. The company currently uses a total cost plus basis to determine the selling price of its products A and B. This is based on full cost using an overhead absorption rate per direct labour hour. However, the Managing Director is concerned that the company may be losing sales because of its approach to setting prices. What do you mean by total cost pricing and why the managing director is thinking that total cost plus approach is not suitable for setting the prices. (7 Marks) Page 2 of 2