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Question 2 LANG Ltd manufactures and sells two products - GLAN and GLIS. The company has recently implemented an activity-based costing system and has provided
Question 2 LANG Ltd manufactures and sells two products - GLAN and GLIS. The company has recently implemented an activity-based costing system and has provided you with the following information: GLAN GLIS TOTAL 10,000 20,000 30,000 $50 $20 Production & Sales (units) Sales Price (per unit) Costs (per unit) Direct materials Direct labor (at $10 per hour) $15 $10 $8 $5 Cost pools for overheads $ Set Ups 50,000 Machine overheads 130,000 Inspection 30,000 Packaging etc. 105,000 Other information Machine hours No. of production runs Packaging materials (boxes etc.) GLAN GLIS 15,000 5,000 20 20 100 2,000 TOTAL 20,000 40 2,100 Required: 1. If a traditional approach using direct labor hours was used, what would the cost of one unit of GLAN and GLS be? 2. Identify the cost drivers for each of LANG Ltd's cost pools. 3. Prepare computations showing the: total overhead cost for the production of GLAN and GLIS, overhead cost per unit, and total cost per unit. 4. Calculate the profit or loss for each product (using a traditional and ABC approach)
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