Kiwi Ltd manufactures three types of equipment X, Y and Z The company has been experiencing steady declines in its profitability in recent times. Kiwi Ltd currently uses conventional product costing system whereby overhead costs are allocated on the basis of direct labour hours. The direct labour hours are estimated to be 50,000 hours. The Direct material and Direct Labour costs per unit for the three products are as below:

	X	Y	Z
Direct Material	$360	$500	$600
Direct Labour	$50	$200	$100

The management suspects that conventional product costing system used may have contributed to the profit declines. Therefore , the CFO implemented an alternative system namely, activity-based product costing system. Given below are each activity, its cost and its related activity driver.

Activity	Cost	Activity Driver
Material handling	$ 2,600,000	Number of parts
Machining	$ 1,500,000	Machine hours
Cutting	$ 400,000	Labour hours
Total manufacturing cost	$ 4,500,000

The following information pertains to each product line of Kiwi Ltd for the year:

	X	Y	Z
Units to be produced	10000	5000	20,000
Machine hours per unit	5	3	0.5
Parts per unit	2	5	1
Labour hours per unit	1	4	1

1) Calculate the predetermined overhead rate based on Direct labour hours (0.5 mark) Please only enter number do not use dollar sign or decimal point

Predetermined Rate = Answer

2) Calculate the cost per unit under conventional product costing system? (1.5 mark) Please only enter number do not use dollar sign or decimal point Product X Answer Product Y Answer Product Z Answer 3)Determine the total overhead allocated to each of the three products (4.5 marks) Please only enter number do not use dollar sign or decimal point.

	X	Y	Z
Material handling	Answer	Answer	Answer
Machining	Answer	Answer	Answer
Cutting	Answer	Answer	Answer

4) Determine the total cost per unit of producing each product if activity based costing were to be used (1.5 mark) Please only enter number do not use dollar sign or decimal point. Product X Answer Product Y Answer Product Z Answer