SHOW CALCULATE IN DETAILED PLS

Bikeaway Ltd makes two types of bicycle, the Shopper and the Off Road. The Shopper is the most popular product and is sold in large numbers. The Off Road is a more specialised product which is sold in smaller numbers. Budgeted details for the two types of bicycle are as follows: Shopper Off Road Annual sales 200,000 60,000 Average order size 50 20 Direct Materials per unit 45 80 Direct rate per hour E12 12 Special components per unit 1 4 Production batch size 1200 80 Set ups per batch 12 12 Labour hours 2 16 Overheads Material 240,000 Set up costs 918 000 Special component handling 8650 000 Jother overheads 5758 000 Cost Driver Number of batches Number of set ups No. of special comp. Labour hours Required: a) Calculate the cost per unit of the Shopper and the Off Road based on Activity Based Costing techniques. b) Calculate the cost per unit of the Shopper and the Off Road based on traditional Absorption Costing techniques. c) Explain why the overhead costs calculated in a) and b) above vary so significantly and what might be the possible consequences of not adopting an Activity Based Costing system