SECTION A You must answer the compulsory question from this Section. You must use ONE WHITE answer sheet per question. To provide an answer that exceeds the space on the answer sheet, please raise your hand to request a YELLOW answer sheet. QUESTION 1 Donald Trent runs a big take-away business that sells only Chicken Rice and Fish & Chips. His business consists of cooking department (or kitchen) and selling department (shop). Now he is budgeting for the next financial year relying on traditional absorption costing method. He was able to easily identify the direct material costs and direct labour costs for the coming year. overhead costs of 7,500,000, which are to be simply allocated based on direct He also estimated total hours. However, you leaned Activity-Based Costing (ABC) at school and would like to help him calculate more accurate" costs. Donald agreed with you and provided you with the data below. Chicken Rice 3,000,000 units Fish and Chips 3,000,000 units Expected anual sales volume: Annual direct labour hours: Kitchen 1,000,000 hours 1,200,000 hours Shop 400,000 hours 400,000 hours Overhead cost analysis: Direct material handling 1,500,000 Marination and battering2,000,000 Machine (oven, fryers etc.) set-up 1,500,000 Packaging and selling 2, 500,000 7,500,000 Total overhead costs: Annual cost driver per direct material Chips Fish Cost driver analysis: ChickenRice 1,000 100 1,200 200 3,000 0 2,000 0 2,000 2,000 3,000 3,000 50,000 50,000 Material movement Number of marination and battering Number of machine set-ups Number of orders taken 50,000 50,000 CONTINUED OVERLEAF 1.1 Calculate total overhead costs per unit of Chicken Rice and Fish&Chips using absorption costing (20%) Calculate total overhead costs per unit of Chicken Rice and Fish &Chips using ABC. (30%) (TOTAL 50%) 1.2