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as A manufacturing business makes a product in two models. M1 and M2. Details of...

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Accounting

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as A manufacturing business makes a product in two models. M1 and M2. Details of the two products are a follows: M2 MI Annual sales 8,000 units 8,000 units Number of sales orders 250 60 Sales price per unit 54 C73 Direct material cost per unit C11 Direct labour hours per unit 2.0 hours Direct labour rate per hour C8 Special parts per unit Production batch size Set-ups per batch Production batch size Setups per batch; cost driver Issues of material for each batch number of setups Overhead analysis number of batches Setup costs number of special parts Material handling costs number of sales orders Special part handling costs 108,000 direct labour hours Customer invoicing costs 328,600 A customer has indicated an interest in placing a large order for either model M1 or M2, and the sales manager wished to try to sell the higher-priced model M2. Required: a. Calculate profit per unit for each model using traditional absorption costing (5 marks) b. calculate the profit per unit for each model using ABC (10 marks) c. Advice the sales manager on the best method and why? (2.5 marks) (Total:17.5 Marks) C 97,600 42,000 50,000 31,000 2 2,000 units 1 421 2.5 units C8 8 100 units 3 1

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