The following data have been recorded for four batches in a period.

Batch A B C D

Output (Units) 250 60 200 120

Cost per batch: ()

Direct Material 1650 750 2100 900

Direct labour 9200 1520 6880 2400

Labour hours 1150 190 860 300

The total production overhead for the period has been analyzed as follows:

Machine related cost 14600

Material handling and dispatch 6800

Stores 8250

Inspection/Quality Control 5850

Set up Cost 6200

Engineering Support 8300

50000

Cost drives have been identified for the cost pools as follows:

Cost pool Cost Driver

Machine cost Machine hours

Material handling Materials Movement

Stores Requisitions raised

Inspection Number of Inspections

Set up Number of Set ups

Engineering Support Engineering hours

The following cost driver volumes were recorded for the batches:

Batch: A B C D Total

Machine hour per batch 520 255 610 325 1710

Material Movement 180 70 205 40 495

Requisition 40 21 43 26 130

Inspections 18 8 13 8 47

Set ups 12 7 16 8 43

Engineering hours 65 38 52 35 190

Required:

1. Calculate the batch and unit cost using traditional costing bases on a Barbour

hours overhead absorption rate.

2. The batch and unit costing using ABC (Activity-based costing)

c) Compare the cost in a) and b) above.

Comment on the likely position, if the firm was cost-plus pricing