Question 2 (26marks) Trimake Limited makes three main products, using broadly the same production methods and equipment for each. A conventional product costing system is used at present, although an activity based costing (ABC) system is being considered. Details of the three products for a typical period are: Hours per unit Materials cost Volumes Product Labor Machine per unit ($) Unit Hours Unit 0.5 1.5 20 750 Y 1.5 1.0 12 1,250 z 1.0 3.0 25 7,000 Direct labor costs $6 per hour and production overheads are absorbed on a machine hour basis. The overhead rate for the period is $28 per machine hour. Further analysis shows that the total of production overheads can be divided as follows: (%) Costs relating to set-ups 35 Costs relating to machinery 20 Costs relating to materials handling 15 Costs relating to inspection 30 Total production overhead 100% The following activity volumes are associated with the product line for the period as a whole. Total activities for the period: Number of movements of Product Number of set-ups materials Number of inspections X 75 12 150 Y 115 21 180 Z 480 87 670 Total 670 120 1,000 Required: a. Calculate the cost per unit for each product using the conventional method by filling the blanks in the table. (6 marks) X Y Z Direct labor at 6$/hour Direct materials Overhead at $28 per machine hour Total cost per unit b. Calculate the cost per unit for each product using the ABC method by filling the blanks in the table. Show your workings. (20 marks) bl. Compute the total production overhead (3 marks) Show your workings here X $ Y N b2. Overhead costs traced to cost pool (4 marks) $ Set-up costs Show your workings here Machining Materials handling Inspection b3. Activity rates (4 marks) $ Show your workings here Cost per set-up Cost per machine hour Cost per material movement Cost per inspection 64. Assign overhead to each product 6 marks) X Y N Set-up costs Machining Materials handling Inspection Overhead cost per unit b5. Production cost per unit (3 marks) X Y Z Direct labor at 6$/hour Direct materials Overhead at $28 per machine hour Total cost per unit