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Question 4 Active Ltd manufactures two types of outdoor toys, TRAMPOLINE and IFLATABLES, using same equipment and similar processes. The company is currently absorbing overheads

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Question 4 Active Ltd manufactures two types of outdoor toys, TRAMPOLINE and IFLATABLES, using same equipment and similar processes. The company is currently absorbing overheads on machine hours bases totalling 135,000 per annum. Active Ltd has a pricing strategy of total cost plus 25% mark-up. The management accountant recommended applying activity- based costing as an alternative to absorption coating. An extract of the production data for these two products in one period are shown below: Overhead costs: Overhead costs Set-up costs 60,000 100,000 Handling charges Other overheads 110,000 Additional information is: Operational information Units TRAMPOLINE IFLATABLES Set-ups 100 set-ups 400 set-ups Movements 500 movements 500 movements Direct labour hours 3,000 labour hours Cost of Material Labour hours spent Wage rate 7,000 labour hours 20 per unit 2 hours per unit 10 per hour 40 per unit 5 hours per unit Quantity produced 2000 units 1000 units Required: PORTSMOUTH icp Identify the TOTAL COST and PRICE for each product of TRAMPOLINE and IFLATABLES, using activity-based costing. (25 marks)

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