Question 4 (16 Marks) The Huza'rla Company make three types of sunglasses the Ushna (U). the Sahil (S) and the Pervez (P). Atraditional product coating system is being used at the company; although a friend, Muneeb has suggested activy based costing [ABC] system to be used. Details of the three products for a typical year are: Hours per unit Materials Cost Production Product Labour hours Machine hours per unit {RSJ Units U 'r 1 l 20 750 S 1 it 1 12 1,250 P 1 3 25 7,000 Direct labor cost is Fls.8 per hour and production overheads are absorbed on machine-hour basis. Total production overheads are Rs.648,700. Flequired: (a) Calculate the overhead absorption rate using the traditional method. {1 mark} [Round to 2 decimal points] (b) Calculate the cost per unit for each product using traditional costing. Give your answer in the given format (3 marks). [Hound to 2 decimal points] An ABC study revealed that the total production overheads can be divided as follows: \"/0 Costs relating to set-ups 3 Costs relating to machinery 20 Costs relating to materials 15 handling Costs relating to inspection 30 Total production overhead 100 The following total activity levels are associated with each product line for the year as a whole: No. of set ups No ot movements Number of of materials inspections Product U 75 12 150 Product 8 115 21 180 Product P 480 37 670 Total 670 120 1.000 Required: (c) Calculate the cost per unit for each product using ABC principles. Give your answer in the given format. [10 marks) [Bound to 2 decimal points] to) Costs per unit calculated under ABC are ditterent to costs per unit calculated under the traditional method. Give two examples from the above data explaining the change in cost observed and the reason for the change for different products. (2 marks)