The traditional costing system used by Jimmy Ltd shows below the details of two products manufactured

	Product A	Product B
Production volume	12,000	14,000
Direct materials per unit	$20	$25
Direct labour	$14	$10
Allocated manufacturing overhead per unit	$215	$250

As the company lost some of its major customers, Sara Walsh, the management accountant collected the following information about the possibility of using the Activity-Based Costing system

Activity	Annual cost	Cost driver	Consumption of cost driver
			Product A	Product B
Material handling	$130,000	260 Orders executed	150	110
Inspections	$130,000	130 production runs	90	40
Delivery	$26,000	65 shipments	50	15
Production returns	$52,000	130 production returns	90	40

Required

1. Under Activity-based costing, what is the manufacturing overhead per unit for product A and product B? Round your answer to decimal places

2. Under the traditional costing system, what is the cost per unit for product A and product B?

3. Under activity-based costing system, what is the cost per unit for product A and product B?

4. If the selling price is $200 per unit for product A, what is the profit per unit sold of product A under the traditional costing system and the activity-based costing system

Question 2(6 marks)

Data in the table below pertains to the Wagga Division of Lucky Company for 2022.

Income	$200,000
Sales	$2,500,000
Investment	$1,000,000

Required

1. Calculate ROI using the Du Pont method

2. If investment in the Wagga Division is reduced to $800,000, calculate the ROI using the Du Pont method.

3. If Lucky Companys minimum desired rate of return on invested capital is 10%, calculate the 2022 residual income of the Wagga Division.