QUESTION 1: You got funding from the Zambia Development Agency (ZDA) to invest in innovations of two products namely a printer which will be able to print Election ballot papers and also mobile phones. You adopt to use an absorption costing system and overhead costs are currently allocated using plant wide overhead rate based on direct labour hours. However, outside cost consultants have recommended that you use activity based costing to charge overheads to products. You expect to produce 4000 printers and 2000 mobile phones with each printer and mobile phone requiring 2hrs and 0.5 hrs of direct labour to produce respectively. Therefore the direct material and labour costs included in the two products are as below: Printer Mobile phone Direct material per unit K17 Direct labour per unit K4 Budgeted overheads Budgeted Activity volume levels K120.000 Packaging & transportation 6000 boxes K80,000 Production set ups set ups K70,000 Material Handling 5000kgs Based on the analysis of the three overhead activities, it is estimated that the two products would require these activities as follows: Printer mobile phone Activity Totals Production setups 5 set ups 15 set ups 20 set ups Material Handling 1000kgs 4000kgs 5000ks Packaging & Transportation 4000 boxes 2000boxes 6000boxes REQUIRED: 1. Calculate the cost per unit of the two products using activity based costing system (10 maries) 2. Calculate the cost of each product using a plant wide rate based on labour hours (10marks) 3. Calculate the activity cost driver rates for set ups, material handling and packaging and transport (Smarks)