Micron limited manufactures three types of drugs namely Apax, Bex, Cox and Dos using the

same processing plant. The following information relates to the company:

Product Apax Bex Cox Dos

Units produced $2,00020,0002,40028,000$

Material cost per unit $($Ksh$)20206468$

Labour hours per unit $2286$

Machine hours per unit $1146$

Labour cost per unit $($Ksh$)12124836$

The cost accountant analysed the production overheads recorded under the following headings:

Overhead cost element Amount $($Ksh$)$

Setup costs $17,420,000$

Factory costs $($machine oriented activity$)149,696,000$

Cost of ordering materials $7,680,000$

Materials handling costs $30,320,000$

Administration cost for spare parts $34,400,000$

Investigations into the production overhead activities for the period reveal the following:

Product Apax Bex Cox Dos

Number of set$-$ups $424832$

Number of material orders $432432$

Number of times material

Was handled $8401248$

Number of spare parts used $820416$

Required:

i$)$ Unit cost per product using the machine hour rate $(4$ marks$)$

ii$)$ Unit cost per product using the activity based costing $(12$ marks$)$

iii$)$ Unit price per product if a markup of $50\%$ is used $(4$ marks$)$