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f QUESTION 3 Acon limited manufactures tablet covers in a range of designs using a highly resilient fabric. Sales are made exclusively online and the
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QUESTION 3 Acon limited manufactures tablet covers in a range of designs using a highly resilient fabric. Sales are made exclusively online and the company's website allows for customisation of covers based on buyer preferenees. Up until 2020, the company operated a traditional absorption costing system. However, in January 2020, Tom Jones, was employed as the new Management Accountant and he oversaw the suecessful implementation of an Activity-Based Costing (ABC) system. The directors of Acon limited are very happy with the new system as they were aware that overheads had become a much more significant part of the product cost. When an order is placed for a tablet cover, the requisitions department reserves the material and labour necessary to produce it. The design costs and production scheduling costs both relate to the customer preferences; the more detailed the tablet cover, the more machines involved and the more set ups required. The tablet covers are inspected during the production process to ensure that they meet quality standards. Once produced, the tablet covers are firishod and packaged. A margin of 45% on selling price is achieved on each cover sold. Cost and activity information for the current year is shown below: Details relating to two tablet cover orders are as follows: REQUIREMENT: (a) Calculate the total cost of each of the two orders referred to above using Activity-Based Costing (ABC) to allocate overheadsStep by Step Solution
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