Bagus bhd manufacturers two types of plastic bowls deep and shallow and applies manufacturer overheads to all units at the rate of RM 45 per machine hour, production information is as follows

	Deep bowls	Shallow bowls
Anticipates volumes (units)	5000	8000
Direct material costs (RM)	20	35
Direct labour costs (RM)	20	30

The controller who is studying the use of activity based costing has determined that the firms overheads can be identified with three activities, manufacturing set-ups, machine processing and product shipping. Data on the number of set-ups, machine hours worked, and outgoing shipments, the activities three respective cost drivers, are as follows

	Deep bowls	Shallow bowls	Total
Set ups	70	30	100
Machine hours worked	10000	30000	40000
Outgoing shipment	140	60	200

The firms total overheads of RM 1740000 is subdivided as follows : manufacturing set-us, RM 180000, machine processing RM 1,2000,000 and product shipping RM 360,000

Q1A Compute the application rates that would be used for manufacturing set-ups, machine processing and product shipping in activity based costing

Q1B using activity based costing method compute the unit manufacturing costs of deep bowl and shallow bowl if the expected manufacturing volume is attained

Q1C using activity based costing compute the total cost per unit of deep bowl and shallow bowl

Q1D - if the companys selling price is based heavily on cost would a switch to activity based costing from current traditional system result in a price increase or decrease for deep bowl and shallow bowl? Show the workings

Q1E explain the difference in the answers ( as calculated in 1D above) between activity based costing and the traditional costing system