QUESTION 6 (15 MARKS, 27 MINUTES) The fallowing data pertains to ABC Electronic, which praduces products A, B, and C Products A E Machine hours (per unit)y 2 3 Annual production volumes 22 000 25 000 32 000 (units) N$40 Prime cost (per unit) N$25 N$30 For purposes of an activity-based costing exercise, the following overhead activities with an allocated overhead cost have been identifind: NS Set-ups 205 000 Technical department 370 000 Machinery maintenance and 650 000 depreciaton 725 000 Inspection and quality control Dispatch 525 000 Total overhead cost 2 475 000 ABC Electronics uses the following cost drivers to allocate its overhead activities to ts products determine their total cost: Cost driver Machine hours Number of dispatches Number of engineering changes Number of inspection reports Number of production runs 7 The utilization of the cost drivers by the three products has been summarized as folaws Praducts B Production runs 52 80 73 Dispatches 82 78 92 128 Inspection reports 186 86 Machine hours 44 000 25 O00 96 O00 Engineering changes 40 28 32 REQUIRED MARKS What are two limitations of Activity based cnsting? 2 6.1 Alocate the overhead cost to each product using activity-based costing prinoples. 13 6.2 TOTAL MARKS FOR QUESTION 6 15 THE END