Required Part A: Calculation (show detailed workings) (32.5 Marks) (MLO 2) 1. Using traditional absorption costing system, a. Calculate the total manufacturing overhead costs. b. Compute the manufacturing overhead cost for each product. Compute product cost per unit of each product. c. d. Compute the profit per unit of each product. 11 marks a. Calculate manufacturing overhead cost for each activity. b. Compute the manufacturing overhead cost allocation rate for each activity. c. Compute the manufacturing overhead cost per unit allocated to each product. d. Compute product cost per unit of each product. e. Compute the profit per unit of each product. 21.5 marks Part B: Analytical Discussion (37.5 Marks) (MLO 3) For this part, please refer to your calculations in part A above where appropriate. 1. Compare the costs of each board in requirements 1c and 2d. Why do the traditional absorption costing system and activity-based costing systems differ in the cost per unit of each board? (5 % Marks) 2. Compare the profit per unit of each board in requirements 1d and 2e. Briefly discuss the least profitable and most profitable products under both traditional absorption costing and ABC. (2 marks) 3. Please elaborate on the reasons for the changes in the cost per unit of each product in your answers to 1c and 2d. (6 Marks) 4. Assuming that the total manufacturing costs and annual production are both constant. Using ABC information, what prices for all three types of circuit boards can Southem Digital offer to TWSB in order to achieve the company policy of 10% profit margin? (1 marks) 5. Please explain for each product, how activity-based costing may help Southern Digital Sdn. Bhd. to improve profitability. (9 Marks) 6. Activity-based costing seems to provide the company with more accurate cost information compared to traditional absorption costing. Provide a detail explanation regarding the five limitations in implementing activity-based costing system. (7% Marks) 7. Please comment on the issue raised by the Plant Manager to discontinue supplying Silver circuit board. Specifically comment on the pricing and product mix decisions. (3 Marks) 8. Overall, what recommendations would you propose to the company regarding contract renewal? (3 marks) 2. Using activity-based costing system, Required Part A: Calculation (show detailed workings) (32.5 Marks) (MLO 2) 1. Using traditional absorption costing system, a. Calculate the total manufacturing overhead costs. b. Compute the manufacturing overhead cost for each product. Compute product cost per unit of each product. c. d. Compute the profit per unit of each product. 11 marks a. Calculate manufacturing overhead cost for each activity. b. Compute the manufacturing overhead cost allocation rate for each activity. c. Compute the manufacturing overhead cost per unit allocated to each product. d. Compute product cost per unit of each product. e. Compute the profit per unit of each product. 21.5 marks Part B: Analytical Discussion (37.5 Marks) (MLO 3) For this part, please refer to your calculations in part A above where appropriate. 1. Compare the costs of each board in requirements 1c and 2d. Why do the traditional absorption costing system and activity-based costing systems differ in the cost per unit of each board? (5 % Marks) 2. Compare the profit per unit of each board in requirements 1d and 2e. Briefly discuss the least profitable and most profitable products under both traditional absorption costing and ABC. (2 marks) 3. Please elaborate on the reasons for the changes in the cost per unit of each product in your answers to 1c and 2d. (6 Marks) 4. Assuming that the total manufacturing costs and annual production are both constant. Using ABC information, what prices for all three types of circuit boards can Southem Digital offer to TWSB in order to achieve the company policy of 10% profit margin? (1 marks) 5. Please explain for each product, how activity-based costing may help Southern Digital Sdn. Bhd. to improve profitability. (9 Marks) 6. Activity-based costing seems to provide the company with more accurate cost information compared to traditional absorption costing. Provide a detail explanation regarding the five limitations in implementing activity-based costing system. (7% Marks) 7. Please comment on the issue raised by the Plant Manager to discontinue supplying Silver circuit board. Specifically comment on the pricing and product mix decisions. (3 Marks) 8. Overall, what recommendations would you propose to the company regarding contract renewal? (3 marks) 2. Using activity-based costing system
