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The Luxury GAt Company produces three distinct products. Its managers are concemed that the compamrs profit is not as high as its competitors. They believe
The Luxury GAt Company produces three distinct products. Its managers are concemed that the compamrs profit is not as high as its competitors. They believe they fall in profics could be caused due to the company/s uncempetitive seline pricelsf, for one or more product, and losues on other producti. Details of the company's costs and welline prices are an followi:- Currently the compary uses the tradeional method of allocatine indirect evecheads but is coenidering wine the AsC method for increasine the accuracy. The company's indirect overheads are as follows: - Value of machinery 600000 400000 300000 Requiled 2. Cakulate the profit per wit for the three products based an the companys current Labour hours based overhead method. (5 Marles) b. Cakulate the profit per unit for the theee products using the principles of ABC. Enplain your reasons for choosing the baves of overhead allocation. (15 Marks) TOTAL MARKS =20
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