Job XZ4 is for a new customer who says that if the price is above 1,900 he will buy from a competitor. Job XZ4 has the following specifications:

Job XZ4	Specifications
Direct materials	1,000
Direct labour	20 hours @ 10 per hour
Sales orders	1
Machine hours	100
Set ups	5
Weeks in warehouse	6
Inspections	3

4a) Using Traditional Absorption Costing, complete the table overleaf to calculate the SELLING PRICE of Job XZ4. Remember to show all workings

5 marks

Order XZ4
Direct materials
Direct labour
PRIME COST
Overhead
FULL COST
Mark up
SELLING PRICE

A new accountant has joined Away Ltd and has suggested the company use ABC (Activity Based Costing).

4b) Calculate the cost per driver	3 marks

4c) Using ABC (Activity Based Costing), complete the table below to calculate the FULL PRICE of Job XZ4. Remember to show all workings

7 marks

Order XZ4
Direct materials
Direct labour
PRIME COST
Overhead
FULL COST

4d) Using your financial calculations only (from 4a and 4c) , discuss in detail what price should be offered to the customer for Job XZ4 and the consequences of offering this price.	4 marks
Price:
Consequences:
4e) Discuss two other qualitative (non-financial factors) the company should consider before agreeing to fulfil order XZ4.	4 marks
1.
2.

4f) If you owned a manufacturing business, discuss which method of costing: Traditional Absorption Costing (TAC) or Activity Based Costing (ABC), you would use.	5 marks

4g) The full cost of a different product is 20 and the marginal cost of the same product is 14. Discuss how you would use these different versions of cost.	4 marks