Question 1.

Titan Ltd. produces three distinct products and sells them in bulk to smaller retailers. Its managers are concerned that the company's profit is not as high as its competitors. They believe they fall in profits could be caused due to the company's uncompetitive selling price(s), for one or more product, and losses on other products. Details of the company's costs and selling prices are as follows:

Product	Face-gel	Hand-gel	Hair-gel
	GBP	GBP	GBP
Selling Price	45	60	70
Direct Costs
Labour	5	5	10
Direct Material Aqua (Water)
Direct Material (other)	7
Total Direct Cost	12	14	30
Units Produced	1000	1500	800
Labour Hours	2 Hours Per Unit	2 Hours Per Unit	3 Hours Per unit
Indirect Overheads
Depreciation			2100
Purchasing Expenses			1200
Direct Material - Aqua			400
Direct Material Other delivery inspection costs			900
Setup Costs			816
Canteen Expenses			2500
Activities Associated with the OH
Number of Suppliers	4	5	3
Component deliveries per month	3	3	2
Production runs per month	8	10	6
No. of Employees	6	9	5
Value of machinery	1000	1500	500

Required

Calculate the profit per unit for the three products based on the company's current labour hours based overhead method and also Calculate the profit per unit for the three products using the principles of ABC. Explain your reasons for choosing the bases of overhead allocation.