JJ Asian Cuisine has been in the business for a while. They started selling Shanghai Hand pull noodles for $7.2 per serve (frozen and ready heat and eat). Recently, they have decided to introduce a new product into the market: Lamb Cumin with steamed rice. They think that both products should be sold at the same price, $7.2 per unit. However, they want to do a detailed analysis in costing to ensure the product is not over or under price. The following costs incurred in July: Units produced Pulled noodles Lamb cumin 5,562 600 Direct Costs $9,861.43 $900.00 Grocery $2,224.80 $240.00 Packaging $8,066.67 $1,250.00 Labour Chef & Kitchen hand Indirect Costs $1,575.71 Grocery $2,839.05 Labour $1,320.00 Rent $300.00 Advertising $261.11 Depreciation $1,817.36 Electricity & Gas $211.24 Water $737.44 Petrol Additional information: Petrol is used for both grocery pickup (direct cost) and delivery of product to customers. Percentage of petrol used for delivery is 50% Part 1: a. At the moment, JJ Asian Cuisine allocate indirect cost according to direct labour for each product. Calculate the total cost per unit for each product under this method Part 2 Together with their accountant, Jason and James have completed step 1 allocation for indirect costs to be allocated to relevant activities. The purpose of doing this is so they can allocate using Activity Based Costing to work out the appropriate selling price. For example: Chef assistant wages, Grocery, most electricity and water cost are allocated to cooking Some % of electricity is allocated to packing. Percentage of petrol together with some wages, depreciation, car insurance and registration fee and a portion of wages is allocated to purchasing. Other items are allocated on proportion to the most relevant activities Once indirect costs are allocated to relevant activities, the business has the following cost information: Activity Cost pool Driver Noodle Lamb Total 600 $3,368.51 5,562 600 6,162 Cooking units cooked 600 $2,251.34 5,562 600 6,162 Packaging units packed $828.92 10 30 40 Kitchen Setup Number of set ups $1,944.43 5 40 45 Purchasing purchase orders Required: a. Calculate indirect cost rate for all activities b. Allocate indirect cost to each product c. Calculate the full product cost for the two products d. Comments on the outcome and provide advice Jason and James about the selling price for each product if they are going to implement activity based costing method