QUESTION THREE Drawers Ltd manufactures two types of storage cabinets - Type A and Type 8. The company applies overhead to all units at the rate of CBD per machine hour Production information is as follows: Type A Sales units Direct materials cost per unit Direct labour cost per unit 635 C20 Type B 15,000 060 020 The accountant, who is studying the use of activity-based costing has determined that the company's overhead can be identified with three activities: manufacturing setups, machine processing and product shipping. Data on the number of setups, machine hours and number of outgoing shipments, which are the activities' three respective cost drivers are as follows: Type B Setups Machine hours Outning shipments Type A 50 15,000 100 22,500 75 Total 30 38,500 175 The company's total overhead of 3,000,000 is subdivided as follows manufacturing setups overhead costs 6672,000; machine processing overhead costs C1,818,000; and product shipping overhead costs 560,000. REQUIRED: (b) 14 Calculate the prime cost per unit for Type A and Type B storage cabinets 15 Marks Calculate the production cost per unit for Type A and Type B storage cabinets using the machine hour predetermined overhead rate (10 Marks Calculate the production costerunit for Types of A and Type B storage cabinets using the activity based costing system 115 Marts Discuss three changes in the business environment have led to activity-based costing becoming more prevalent (10 Marks Discuss three benefits and three drawbacks of activity-based costing (10 Marks) Id te) (TOTAL: 50 MARKS! Pare A6