Question $2$

Moon produces tow products the A and $B.$ The direct costs of the two products are given below:

Direct materials

Direct Labour

A

$4\mathrm{.}00$

$3\mathrm{.}00$

B

$4\mathrm{.}20$

$2\mathrm{.}20$

The budgeted production for $80,000$ units of A and $30,000$ units of $B.$

The two main activities identified for the simple production process are material handling and production set ups.

Product A requires large production runs and large transfers of materials from stores. However, product $B$ is a more complex product with a number of different types of materials required and shorter and more frequent production runs.

The budgeted fixed overheads of Caplan are $600,000$ and they are made up as follows:

$\backslash$table$[[$Materials handling,$200,000$