[See next page PAM3023: Management Accounting QUESTION 1 (20 MARKS) Mayfair Bhd. is the leading manufacturer of digital door lock in Malaysia. It aims to improve the quality of life by providing a higher level of security and peace of mind that meet their customers' homes and lifestyles. The company manufactures and sells two styles of digital door lock: Brass and Chrome. It uses traditional costing system and overhead costs are currently allocated based on direct labour hours. The basic process of manufacturing digital door lock consists of forming the main body of the door lock, applying a finish, and then assembling the various components, followed by inspection and packaging. For 2023, Mayfair Bhd. has projected that production overhead cost will be RM550,000.00 and budgeted labour hours are estimated to be 55,000 hours. Brass requires 1.5 hours and Chrome 1 hour of direct labour. The following additional data apply. Brass Chrome Sales (units) 20.000 25,000 Selling price per unit (RM) 150.00 100.00 Costing per unit (RM): Direct materials 10.00 5.00 Direct labour 15.00 10.0 For over the years, the manufacturing process of digital door lock has become highly automated, with the use of sophisticated machines that has been controlled by the computers. For this reason, the newly appointed cost accountant of the company believes that activity- based costing can provide a better allocation of production overheads to products than the current system does. In 2023, the production overhead costs and overhead activities to manufacture 20 batches of brass and 25 batches of chrome are estimated as follows: Overhead Costs Budgeted Basis of Expected Activity (RM) Overheads (RM) Absorption Brass Chrome Forming 145,000.00 Machine hours 40 40 Finishing 157.500.00 No. of set-up 20 25 Assembling 110,000.00 Machine hours 20 20 Inspection 70,000.00 Inspection hours Packaging 67,500.00 Boxes 20 25 REQUIRED: B. Compute the total cost for a batch of 1,000 units of brass and chrome. using labour hours as the basis of overheads absorption. [4 Marks] . Compute the total cost for a batch of 1.000 units of brass and chrome if the activity-based costing system is introduced. [9 Marks] [See next page 16 83