No excel

Horn Products Ltd manufactures two types of perfumes Ladies and Men. Both perfumes are produced using the same equipment and similar processes. The following budgeted data has been obtained for the year ended 31 December 2019. Product Production quantity Number of purchase orders Number of set-ups Ladies 50000 800 300 Men 5000 400 200 Resources required per unit Direct material () Direct labour (hours) Machine time (hours) Ladies 50 20 10 Men 125 20 10 Budgeted production overheads for the year have been analysed as follows: Volume related overheads Purchases related overheads Set-up related overheads 550000 600000 1050000 The budgeted wage rate is 40 per hour. The company's present system is to absorb overheads by product units using rates per labour hour. However, the company is considering implementing a system of activity- based costing. An activity-based investigation revealed that the cost drivers for the overhead costs are as follows: Overhead cost Cost driver Volume related overheads Machine hours Number of purchase orders Purchases related overheads Set-up related overheads Number of set-ups Calculate the unit costs for each type of perfume using: a. The traditional costing method. (10 marks) b. The proposed activity-based costing approach. (15 marks) Discuss your results in (a) and (b) above