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Cost Driver Activity 1. Material Handling 2. Setup 3. Machine Maintenance 4. Salaries of Administrator Overhead Cost (RM) 10 000 15 000 120 000 No. of Move No. of Setup Machine Hour Administrative working hour 48 000 You as a new marketing manager at TRACOM Sdn Bhd has to strategize marketing plan for company new products. a) Determine the price for each new shock absorber launched by company by using; i) Traditional costing method with the absorption of overhead based on direct machine hours. ii) Activity-based costing (ABC) method by using activity driver rate as given in Table 1. b) Calculate percentage difference between Traditional and ABC method for each product c) In your opinion which method is more accurate? Explain why do you think so. Cost Driver Activity 1. Material Handling 2. Setup 3. Machine Maintenance 4. Salaries of Administrator Overhead Cost (RM) 10 000 15 000 120 000 No. of Move No. of Setup Machine Hour Administrative working hour 48 000 You as a new marketing manager at TRACOM Sdn Bhd has to strategize marketing plan for company new products. a) Determine the price for each new shock absorber launched by company by using; i) Traditional costing method with the absorption of overhead based on direct machine hours. ii) Activity-based costing (ABC) method by using activity driver rate as given in Table 1. b) Calculate percentage difference between Traditional and ABC method for each product c) In your opinion which method is more accurate? Explain why do you think so

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