QUESTION 1: SATURN LTD Saturn Ltd makes coats in two ranges such as Basic and Deluxe. Information relating to each of these products is set out below: Basic Deluxe Selling price per unit 220 $275 Material cost per unit $70 $80 Labour time per unit 3 hour 4 hours Labour rate per hour 515 15 Annual sales volume 2,000 units 3,000 units The Director of Saturn Ltd has produced the following analysis of total overheads per year and their relevant cost drivers: Cost Cost driver Basic Deluxe Type of overhead Quality Inspections Sales Number of quality 100 130,000 inspections 900 The Director of Saturn Ltd has produced the following analysis of total overheads per year and their relevant cost drivers: Cost Cost driver Basic Deluxe Number of quality 130,000 inspections 100 Type of overhead Quality Inspections Sales invoicing costs 900 Number of 140,000 invoices issued 200 1.800 Direct 270,000 Labour Hours 6.000 12.000 All other overheads Total overhead 540,000 Required: A) Calculate full cost per unit and profit. Rer unit for each product using: the traditional full cost method of overhead absorption (based on direct labour hours) (14 marks) the activity based costing (ABC) method. (20 marks) B) Comment on your findings (6 marks)