The following data is provided for the 2020 financial year:

2020 Sales and Cost estimates Lawnmaster Green Machine

Forecast Sales (Units) 200,000 25,000

Selling price per unit($) $200 $300

Prime Costs per unit $100 $150

DLH per Unit 2.5 2.5

The activity costs budgeted for overhead for the 2020 financial year and related activity cost drivers were as follow:

OH Activity OH Cost Cost Driver Amount of Cost Driver

Lawnmaster Green Machine

Set Ups $493,750 Number of Set ups 25 50

Laser Cutter $1,100,000 Machine Hours 30,000 10,000

Machining $2,100,000 Machine Hours 50,000 15,000

Assembly $1,250,000 Labour Hours 50,000 25,000

Packing $1,800,000 Number of Orders 1000 500

Required:

(a) Using the current standard costing method of applying overhead using direct labour hours develop a spreadsheet to calculate for each model the expected:

i.Gross Profit per unit,

ii.Gross Profit margin ($GP/$Sales),

iii. Total Gross Profit per Model, and

iv. Total Firm Gross Profit.

(b) Using the overhead activity and cost data provided conduct the same analysis utilising Activity Based Costing (ABC) techniques to allocate activity-based costs and again calculate for each model the expected:

i.Gross Profit per unit,

ii.Gross Profit margin ($GP/$Sales),

iii.Total Gross Profit per Model, and

iv. Total Firm Gross Profit.