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Question 2: (35 marks) ABC Ltd manufactures plastic components for the car industry. The following budgeted information is available for three of their key plastic
Question 2: (35 marks) ABC Ltd manufactures plastic components for the car industry. The following budgeted information is available for three of their key plastic components: A B per unit per unit per unit Selling price 400 366 350 Direct materials 100 80 70 Direct labour 70 Direct labour hour per unit 3 4 5 Units produced and sold 20,000 30,000 36,000 60 60 The total number of activities for each of the three products for the period is as follows: A B 2400 Number of purchase requisitions Number of set ups 3600 520 4000 600 480 Overhead costs have been analysed as follows: Receiving/inspection quality assurance Production scheduling/machine set up 2,400,000 1,200,000 Required: 1. Calculate the cost per unit for each product and budgeted profit unit for each product using the traditional costing methods. (8 Marks) 2. Calculate the cost per unit for each product and budgeted profit per unit for each product using the ABC costing methods. (16 Marks) 3. Compare and contrast traditional costing method and the ABC costing method. (11 Marks)
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