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Planet Enterprise produces only two products, gadget and gizmo. The information about the budgeted overhead costs for 2020 is available below. 2020 Estimated Overhead Costs

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Planet Enterprise produces only two products, gadget and gizmo. The information about the budgeted overhead costs for 2020 is available below. 2020 Estimated Overhead Costs Budgeted Production - Products are produced in a batch of 250 . Gadget and Gizmo have to be made in separate batches. - Gadget occupies 40% of the factory space. REQUIRED: a. Assume that Planet Enterprise applies overhead cost to products on the basis of direct labour hours. What is the overhead cost allocated to gadget and gizmo respectively. ( 6 marks) b. Planet Enterprise is considering using activity based costing to allocate its overhead costs. Determine the overhead cost per unit assigned to ench product. ( 12 marks) c. Which method of allocation method would you recommend to Planet Enterprise and why. (2 marks)

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