The following information relating to the four products made and sold by a company for one period.

Product

A B C D

Output in units $12010080120$

K per unit K per unit K per unit K per unit

Direct material $40503060$

Direct labour $28211421$

Machine hours per unit $4323$

The four products are similar and are usually produced in production runs of $20$ units and sold in batches of $10$ units.

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

Machine department costs $($rent$,$business rate,Depreciation and supervision$)10,450$

Set$-$up costs $5,250$

Stores receiving $3,600$

Inspection$/$quality control $2,100$

Materials handling and dispatch $4,620=26,000$

You have ascertained that the cost drivers to be used in an ABC exercise are as listed below for the overhead costs shown.

Cost pools Cost drivers

Set$-$up cost Number of production runs

Stores receiving Requisition raised

Inpection$/$quality control Number of production runs

Materials handling and despatch Orders executed

The number of requisitions raised on the stores was $20$for each product, and the number of orders executed was $42,$each order being for a batchof $10$ of a product.

Required

$($a$)$ Calculate the production costs per unit, using ABC

$($b$)$ Discuss the advantages and disadvantages of the ABC technique