You have recently been appointed as a management accountant

for Furung Co$.,$ the company that produces three products

namely, Pullet, Dynamic and Coils. Since established, Overheads have

been treated using conversional costing approach. However, due to

some developments, management have been advised to change to

activity based costing.

Projected figures for the next year are as follow:

The annual overhead costs have been analysed as:

Material cost per $kg$ is M$21\mathrm{.}6$

Direct labour per hour is M$266\mathrm{.}4$

Required:

Calculate the full cost per unit for each product using;

$($i$).$ Conversional costing. $($Labour hours are considered as an

appropriate base for absorption$).(5$ marks$)$

$($ii$).$ Activity based costing. $(9$ marks$)$

$($iii$).$ Comment on management's consideration to change from

the conversional approach to Activity based approach based on

your calculations above. $(6$ marks$)$