Rate for OH:

Total Direct Material= (AED 6/unit*35,000) + (AED 7/unit*60,000) = 210,000+420,000= 630,000

• Direct Labor 9.8*35,000= 343,000 for Diamond
• Direct Labor 15.6*60,000= 936,000 for pulki
• Total Direct labor= 343,000+936,000= 1,279,000
• Direct Material AED 6/unit for Diamond
• Direct Material AED 7/unit for pulki
• Total Manufacturing overhead AED 633,000

	Inspection	Fabricating	Assembly	Total
Direct Labor	1,279,000*30%=383,700	1,279,000*30%= 383,700	1,279,000*40%= 511,600
Direct Material	630,000*25%= 157,500	630,000*35%= 220,500	630,000*40%= 252,000
Manufacturing overhead	633,000*20%= 126,600	633,000*30%= 189,900	633,000*50%= 316,500
Total cost	AED 667,800	AED 794,100	AED 1,080,100	AED 2,542,000

Activities	Estimated Overhead Costs (a)	Total Expected Activity (b)	Activity Rate (a)/(b)
Inspection	AED 667,800	8,000	AED 83.5
Fabricating	AED 794,100	4.3	AED 184,674.4
Assembly	AED 1,080,100	16,000	AED 67.50

Activities	Activity Rate (c)	Activity measure- Diamond (d)	Total OH (c*d) Diamond	Activity measure- Pulki (e)	Total OH Pulki (c*e)	Total OH
Number of Purchase Orders	AED 83.5	3,000	AED 250,500	5,000	AED 417,500	AED 668,000
Machine hours per unit	AED 184,674.4	1	AED 184,674.4	3.3	AED 609,425.52	794,099.9
Number of setups	AED 67.50	7,000	AED 472,500	9,000	AED 607,500	1,080,000
TOATL MOH						AED 2,542,000

Discuss how a decision by Manufacturing company regarding the continued production of Diamond will be affected by the results of your above calculations.