Businesses should ensure they price their goods and services reasonably to retain competitive advantage. An accurate method of costing is important as it can assist a business to determine a fair price for their final product.

With the above in mind, the CEO of GoGo Airlines has provided you with the following information:

Total Overheads = 200,000

Total Machine Hours = 100,000

Product:

Vegan Meal:

Non-vegan Meal:

Units of Production

300,000

450,000

Material Cost per meal

10

12

Labour Cost per meal

8

10

Machine Hours per meal

1/30

1/5

% Overheads

Set-up Costs

20

Inspections

60

Delivery costs

20

Vegan Meal:

Non-vegan Meal:

Total:

Set ups

100

500

600

Inspections

500

200

700

No. of Deliveries

400

800

1200

You are required to calculate the unit costs of the vegan and non-vegan meals using:

Traditional costing using machine hours as the basis of allocation of costs and

ABC system