Question #1 EL plc manufactures and sells three types of electronic synthesiser Model X Model Y and Model z The company manufactures the synthesisers in North America and distributes the different models throughout the world. All three models are produced by assembling components delivered to North America, but Model Zhas a much greater element of customisation to meet the specific needs of its buyers No stocks of finished product are held The following production and cost information relating to these three models has been produced for the year ending 31 October 2011 Model X Model Y Model Z Production volume (unts) 3000 2000 500 Direct labour cost per unit ($) BO 1500 Direct material cost per unit 15) 150 200 Variable overhead per un 20 50 During this period, the cost of one direct labour hour was $10 and there were fored overhead costs of $1,845,000 The average selling price per unt of each model during the year ending 31 October 2011 was as follows Model X - 5450 Model Y-S650 Model 2-53,750 Management are frustrated that the profitability of Model Z has not been better since its launch They are reluctant to discontinue the line as it is a flagship for their brand but they are not sure how best to resolve the issue Required Use the information provided above to calculate: 1. The number of direct labour hours required to manufacture one unit of each mode', XY and Z 2. The total number of direct labour hours required to manufacture the whole production volume of models X, Y and 2 3. A direct labour hour absorption rate for use in attributing the fixed overhead costs to the three different models, X Y and Z 4. The fixed overhead costs absorbed by the whole production volume of each of the models X. Yand 2 5. The fixed overhead costs absorbed by a single unit of each model. X Y and Z 6. The full cost of production of a single unit of each model, X Y and Zunder absorption costing principles 7. The contribution and profit or loss earned by a single unit of each model, X, Y and Z 8. Comment on your findings and critically assess the directors' views on Model Z. In relation to costing and pricing techniques, what recommendations would you give them