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, Overhaads have been

trealed using conversional costing approach. However, due to some developments, managament 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:

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 managements consideration to change from the conversional approach to Activity

based approach based on your calculations above. $(6$ marks$)$