Question Five

Viola & Drum Ltd produces affordable musical instruments for schools. Aneena Frost, the chief accountant, is reviewing the company's current approach to allocate overheads to products. Currently the company absorbs overheads based on direct labour hours. Aneena feels that the company should switch to activity-based costing (ABC), as the product lines make different demands on the company's overhead resources - in particular, their violin model "Stradicrazy" requires a lot of advance preparation. The following information about their two main product models is available to assist in your calculations:

Materials Kilns w..- unit forwood Driven by number of units Driven . number of kilos