Waugh & Waugh Company Pty Ltd produce two models of petrol lawnmowers, Standard and Deluxe. Overhead was allocated based on direct labour hours. The following information was collected at the end of 2019.

	Standard	Deluxe
Annual sales	25,000 units	26,750 units
Selling price	$450	$650
Direct material cost per unit	$80	$120
Direct labour cost per hour	$50	$40
Direct Labour hours per unit	5	4

Following an examination of the data above the marketing manager recommended that more emphasis should be placed on selling the Deluxe mower. The manufacturing manager disagreed and argued that there were problems in relation to the costing of the mowers. The management accountant agreed with the manufacturing manager and suggested that an activity based costing system should be installed.

The general manager asked the management accountant to recalculate the product costs using ABC techniques. The management accountant subsequently collected the following information.

Overhead activity	Overhead cost	Cost driver	Standard	Deluxe
Setups	$100,000	Number of setups	15 setups	10 setups
Machining	$1,000,000	Machine hours	60,000 hours	40,000 hours
Engineering	$800,000	Engineering hours	25,000 hours	15,000 hours
Packing	$420,000	Packing orders	20,000 orders	5,000 orders

Required:

1) Calculate the predetermined overhead rate based on Direct labour hours (1 mark) Please only enter number do not use dollar sign or decimal point

Predetermined Rate = Answer

2) Calculate the cost per unit under conventional product costing system? (1 mark) Please only enter number do not use dollar sign or decimal point Standard Answer Deluxe Answer 3)Determine the total overhead allocated to each of the products (4 marks) Please only enter number do not use dollar sign or decimal point.

	Standard	Deluxe
Set up	Answer	Answer
Machining	Answer	Answer
Engineering	Answer	Answer
Packing	Answer	Answer

4) Determine the total cost per unit of producing each product if activity based costing were to be used (2 mark) Please only enter number do not use dollar sign where applicable, use two decimal point. Standard Answer Deluxe Answer