Question 2 Saline Waitrose Ltd. produces 2 products, Product X and Product Y. till now, it. The company has adopted the traditional absorption costing methods in transferring production overheads via an overhead absorption rate based on direct labour hours. The company's general director has recently read an article about activity-based costing (ABC), a revolutionary costing technique. He asks the finance director to organize a comparison by applying the ABC costing for a month. To do this, the finance director must present a detailed ABC costing technique and how this is done for Products X and Y. Five main activity bases of the factory operations were identified as follows: Machining Finishing Materials ordering Materials issued to production Scheduling, control, and quality testing of production During November 2021, the Saline Waitrose produces 2,000 units of Product X and Product Y. it incurs the following indirect production overhead costs 2.000 16.000 23.000 Factory deaning Power Factory rental Factory insurance Supervisor salaries Canteen changes Machinery depreciation Machinery maintenance Production consumables Other indirea labor costs Other factory costs Total 5.000 12.000 3.000 21.000 5.000 6.000 12.000 8.000 113,000 PY 2.00 The fundamental cost driver for each activity, together with quantities is established as follows: Coll der Thes Dan 100 | d it aasan 13 22 Required: a) Show all calculations for the total overhead absorbed based on the activity based costing (ABC) approach for Product X and Product Y (10 marks) b) Determine the production cost per unit of Product X and Product Y based on the ABC approach