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QUESTION 1 Ahmad Danial is the cost supervisor at the production department for a bakery chain store called AD Bakery in Damansara. This bakery produces
QUESTION 1 Ahmad Danial is the cost supervisor at the production department for a bakery chain store called AD Bakery in Damansara. This bakery produces three types of products, namely cupcakes, doughnuts and curry puffs. The following information relates to the bakery operations for the year ending 31 December 2017. The total production costs are given below: RM 8,000 Cost pools Machining Set-up costs Packaging Inspection 5,500 4,200 2,800 Products Machine Direct Material Direct Labour Output (Unit) 500 50 hours 750 kg 150 hours Cupcakes Doughnuts Curry puffs 300 60 hours 100 kg 60 hours 200 80 hours 50 kg 40 hours The direct labour rate is RM1.50 per hour and the direct material cost is RM1.20 per kg. The production manager and the cost supervisor have arrived at the following cost driver basis. Cost driver Cost pools Machining Set-up cost Packaging Inspection Machine hours Direct material (kg) Number of units produced Number of units produced Required: 1. Calculate the production cost per unit using the ABC approach. (14 Marks) 2. Using the traditional costing approach, compare the cost per unit for each of the products. (9 Marks)
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