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Q2. Read the following case relating to a toy manufacturing company produces two products: Product A and B and solve the questions given at the
Q2. Read the following case relating to a toy manufacturing company produces two products: Product A and B and solve the questions given at the end of the case using the data. The budgeted cost information for each product is as follows. 15 Marks) Particulars Material Labor Product-A 30 Product -B 40 20 15 Production overhead cost incurred Machine cost 300000 Set up cost 700000 Quality inspection cost 250000 Total 1250000 For each of product "A" and "B" we are also given the following information: Product "A" 20000 180 No of units produced No production runs No of inspection No of machine hours Product "B" 40000 100 400 50000 300 50000 Requirements: 1. Calculate the cost of each unit of product "A" and "B" under absorption (Traditional method) costing using the number of units as basis of absorption. 2. Calculate the cost of each unit of product "A" and "B" using ABC system. In this case we are required to suggest the toy company whether to adopt ABC or not
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