You are given the following budgeted information for Milch Ltd. for the next year.

	$
Direct wages	54,000
Direct materials	45,000
Depreciation	8,000
Indirect salaries	20,000
Rent & insurance	9,000
Electricity	5,000
	Hours
Machine hours	21,000
Direct labour hours	9,000

1. Using the above information, calculate the full cost of Job X3. Job X3 uses $20 in materials, 4 hours direct labour and 3 hours of machine time.
2. Explain, with examples, direct costs and indirect costs.
3. When calculating an Overhead Absorption Rate, discuss when direct labour hours, machine hours, and units are used.
4. Discuss how the above method of Traditional Absorption costing, using a factory wide overhead rate, could be made more accurate, and the problems with this approach.
5. What are the differences in approach and use of the Traditional method and the ABC method of costing?