JIM Ltd has identified the following overhead costs and cost drivers for next year Expenses /cost Expected ( cost) $ Selling cost 65,000 Administration Cost 45,000 Manufacturing overhead cost 28,000 Utilities cost [store] 22,000 Cost Driver E( actual transactions) Direct Labour Hours 4500 Machine Hours 15,000 The following is the cost of 2 products made by the company : Product X Product Y Direct materials $5200 $2600 Direct Labor Hour Rate $29.50 $14.50 Units completed 350 180 DLH (hours) 460 320 Machine hours 75 50

REQUIRED 1. Calculate the Predetermined Rate [PR] for product X using machine hours and product Y using direct labour hours 2. What is the applied cost assigned to product X and product Y? 3. Calculate the total product cost using FBC for both products 4. Calculate the unit cost for each product 5. Is the applied cost for each product under or over-applied? 6. What are the disadvantages of FBC and what solution has been offered as alternative?