Exercise $2$ on ABC:

The following information is available:

$\begin{array}{cc}\text{T}\text{o}\text{t}\text{a}\text{l}\text{O}\text{v}\text{e}\text{r}\text{h}\text{e}\text{a}\text{d}\text{s}& \text{\$}100000\\ \text{C}\text{o}\text{s}\text{t}\text{s}\text{r}\text{e}\text{l}\text{a}\text{t}\text{i}\text{n}\text{g}to\text{s}\text{e}\text{t}\text{u}\text{p}\text{s}& 70\%of\text{o}\text{v}\text{e}\text{r}\text{h}\text{e}\text{a}\text{d}\text{s}\\ \text{C}\text{o}\text{s}\text{t}\text{s}\text{r}\text{e}\text{l}\text{a}\text{t}\text{i}\text{n}\text{g}to\text{i}\text{n}\text{s}\text{p}\text{e}\text{c}\text{t}\text{i}\text{o}\text{n}\text{s}& 30\%of\text{o}\text{v}\text{e}\text{r}\text{h}\text{e}\text{a}\text{d}\text{s}\\ Noof\text{s}\text{e}\text{t}\text{u}\text{p}\text{s}& 100\text{s}\text{e}\text{t}\text{u}\text{p}\text{s}\\ Noof\text{i}\text{n}\text{s}\text{p}\text{e}\text{c}\text{t}\text{i}\text{o}\text{n}\text{s}& 50\text{i}\text{n}\text{s}\text{p}\text{e}\text{c}\text{t}\text{i}\text{o}\text{n}\text{s}\end{array}$

a$)$ Calculate the cost per driver $($Cost Driver Rate$)$

To produce product $A$

$\begin{array}{cc}Noof\text{s}\text{e}\text{t}\text{u}\text{p}\text{s}& 20\text{s}\text{e}\text{t}\text{u}\text{p}\text{s}\\ Noof\text{i}\text{n}\text{s}\text{p}\text{e}\text{c}\text{t}\text{i}\text{o}\text{n}\text{s}& 3\text{i}\text{n}\text{s}\text{p}\text{e}\text{c}\text{t}\text{i}\text{o}\text{n}\text{s}\end{array}$

$($Note the cost driver rate is the activity rate$)$

b$)$ Calculate the total overheads applicable to Product A$.$