.. OMANTEL 8:35 PM 82% Bayan Alsyabi Section 2 QUESTION 2 MMM Manufacturing Company is currently engaged in the production of three products: A, B and C. These products use the same raw materials, though the consumption of quantity differs. Details of quantity required to each product in terms unit and labour hours provided as below: ABC Direct Material (Units consumed 3 4 5 Direct Labour (No. of hours) 543 Direct materials cost RO 2.3 per unit while the direct labour costs are RO 3.2 per hour. For many years, the company has been using absorption costing for allocating overheads. The basis of allocation used was the total labour hours. The budgeted production of these products are given below Budgeted Production 4,000 6,000 12.000 Details of overhead are given below. Total Machine Set Up Costs 32.000 Procurement expenses 24/000 Machine running costs 45,000 Afler Sales Support 22,000 ABC Details of the cost drivers are given below; No. of machine set up 30 25 30 No of purchase orders 200500 200 Machine hours per unit 2 3 3 No of visits to the customer 200 250 70 You are required to calculate: - . Cost per unit for each product using Absorption costing. Cost per unit for each product using ABC. Identify products for which under costing and/or over costing is observed 15 Marks