U.K. College of Technology > BUSINESS 632 > Brief_1.doc Brief_1.doc Rate 5 more documents to earn a free unlock i Helpful !' Unhelpful 1:1. Is this document missing answers? : _ _ _ 1: Get Answers Get FREE answers and explanations from our Expert Tutors In as fast as 15 mlnutes (15 marks) 3. Based on the selling prices per the case, calculate the prot for each model based on the three different costing methods. Comment on your results. - ' A solution to this question has been requested by another student. It will be ready shortly. (10 marks) Based on the information provided in the last section of the case \"Opporttmity for Business expansion . . .\" analyse the following questions related to Asteroid cycles\" 4. Calculate the total production cost for both products \"Tour\" and \"Giro\" using: a. Traditional costing system approach b. Activity-based costing approach - ' A solution to this question has been requested by another student. It will be ready shortly. Opportunity for Business Expansion ... Carlos Lopez is also calibrating the possibility to invest in a nearby manufacturer of mountain bikes named Asteroid Cycles, which is having financial difficulties. Carlos Lopez knows quite well the company because he has two very good friends working at Asteroid Cycles, the Marketing Manager and the Research & Development Manager. Carlos Lopez has asked Asteroid Cycles owner somepast years as well as future financial projections. During the last meeting, Asteroid Cycles owner shared some costing information about the company. Costing data about Asteroid Cycles is summarised as follows. Asteroid Cycles produces and sells mountain bikes and has four key products. This year, for the first time, it is operating an Activity-based Costing system in parallel with its long-standing traditional costing system (which absorbs overheads on a machine hour basis). The planned production activity cost pools and cost driver activity levels for all the output for the year are as follows: Cost pool Activity (E ) Activity levels Purchasing materials 750,000 5,000 purchase orders Storing materials 800,000 1,600 issue notes Setting up machinery 600,000 600 set-ups Running machinery 990,000 10,000 machine hours Total production overheads 3,140,000An analysis of actual annual production output for its two star products (Tour' model and 'Giro' model) shows the following figures: Activity 'Tour' 'Giro' Units produced 1,500 800 Purchase orders 1,500 500 Store issue notes 800 400 Set-ups 235 100 Machine hours 4,000 3,000 Furthermore, costs in E for direct materials and direct labour for these two models ( 'Tour' and 'Giro') are as follows (based on the number of units produced specified in the table above): "Tour' 'Giro' Direct materials costs E 150,000 E 60,000 Direct labour costs E 700,000 { 110,500Carlos Lopez has performed a cost analysis comparing the traditional costing system and the Activity-Based Costing system and he is extremely confused with the results obtained. For example, his calculations for the 'Tour' model reveal that the total cost per bicycle is identical for both approaches (traditional costing system and Activity-Based Costing). He always assumed that both systems would provide different gures since they applied different allocation methods. Carlos Lopez is rather suspicious that Asteroid Cycles owner has not been transparent with regards costing information. After certain deliberation with this top management team, Carlos decided not to invest in Asteroid Cycles