QUESTION 5: Bravo LTD Bravo Ltd makes two products A and B. Information relating to each of these products is set out below. A 95 B 140 Selling price per unit Material cost per unit 36 52 Labour time per unit 2 hours 3 hours 12 12 Labour rate per hour Number of Units Produced each year 4,000 units 6,000 units 400 1600 Number of sales invoices issued each year Size of each production batch Bought-in parts per unit Machine set-ups per batch 400 150 1 5 2 3 Machine Hours total 4,000 26,000 The Finance Director of Bravo Ltd has recently produced the following analysis of overheads and their relevant cost drivers: Cost () Cost Pool Bought-in parts handling costs 136,000 Materials handling costs 60,000 Cost Driver Number of bought-in parts Number of production batches Number of sales invoices issued Number of machine set- ups Machine hours Sales invoicing costs 16,000 Machine set-up costs 28,000 All other overheads Total overhead costs 150,000 390,000 Required: A) Calculate the total cost per unit and profit per unit for each product using: - the traditional full cost method of overhead absorption (based on labour hours) (2 marks) - the activity-based costing (ABC) method (6 marks) B) Comment on your findings and suggest an action plan accordingly (1 mark)