B 7. Chackson Limited produces kid's study table. The management of the company is considering the production for next year and has asked for help with certain financial decisions. The following information is available: Selling price (per table) 90 Direct materials (per table) 30 Direct labour (per table) 25 Fixed production overheads 150,000 per year The company is planning to manufacture 10,000 tables next year. Required: You are to calculate: the marginal cost per table the absorption cost per table the profit or loss if 10,000 tables are sold. (20 marks) & Trimake Ltd makes three products A,B and C. The following budgeted information is available. B C Per unit Per unit Per unit Selling price 250 233 225 Direct material 55 45 40 Direct labour 40 45 40 Units produced and sold 10,000 15,000 18,000 The total number of activities for each of the three products for the period is as follows Number of Purchase requisitions 1500 2400 Number of set-ups 260 350 2100 300 Overhead costs have been analysed as follows Receiving/inspecting quality assurance Production scheduling/machine set-up 1800,000 1400,000 Calculate the budgeted profit per unit for each of the three products using Activity based budgeting. (20 marks) The following Budgeted information relates to Zenai Ltd for the forthcoming period. The following Budgeted information relates to Zenai Ltd for the forthcoming period. Products Sales and Production (Units) R (000) (000) (000) 70 60 50 Selling price per unit 50 100 85 Prime cost per unit 40 84 65 Hours hours hours Machine Department (machine hours per unit) 6 3 Assembly Department (direct labor hour per unit) 8 Over heads allocated and apportioned to production departments (including service cost centre costs) were to be recovered in product cost as follows: Machine department at 1.10 per machine hour Assembly department at 0.625 per direct labour hour You ascertain that the above overheads could be reanalysed into cost pools as follows: Cost pools 000 cost Driver Quantity for the period Machining services 397 Machine hours 820,000 Assembly services 418 Direct labour hours 950,000 Set-up costs 32 Set-ups 820 Order processing 186 Customer orders 42,000 Purchasing 92 Suppliers order 14,200 You also have been provided with the following estimates for the period: Products Number of set-ups Customer orders 8500 140 250 250 8500 17000 Supplier's orders 3500 4500 4700 Required: (a). prepare and present profit statements using- (i). conventional absorption costing (10 marks) (10 marks) (ii). Activity based costing. (b). comment on why ABC is considered to present a fairer valuation of the product cost per unit. (10 marks)