Two products X and Y are made being using similar equipment and methods.

Data for the previous year is as follows:

 

Required

Calculate the overhead to be absorbed per unit based on

a) Conventional absorption costing’s using a labour rate;

b) ABC approach using suitable drives.

Units produced Labour hour per unit Machine hour per unit Set ups in period Orders handled per period Overhead for the period Relating to productions set-ups Relating to order handling Relating to machine activity X 6 000 1 4 15 12 $ 89,500 15,000 27,500 Y 8 000 2 2 45 60