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Question 1 Bless Sdn. Bhd. (BSB) manufactures two products, Gold Bar and Gold Coin. They are all made from the same materials. Currently, BSB has been using conventional absorption costing to allocate overheads to its products. Due to the COVIC-19 pandemic, BSB has realised the importance of product costing accuracy. BSB is now considering the adoption of an activity-based costing system for better profitability analysis. The cost accountant has prepared the cost information of the two products for year 2022 as follows: Product Gold Bar Gold Coin Standard costs per unit RM Direct materials Direct labour 39 50 Variable production overheads RM 35 45 8 9 8 6 60 Production in units 4,000 9,000 Machine hours per unit Number of set-ups 140 Number of material requisitions 200 150 Number of inspections 1,200 4,200 The selling prices for Gold Bar and Gold Coin have been budgeted at RM200 and RM300 respectively. Budgeted total machine hours for year 2022 is 86,000 hours. The total fixed production overheads for year 2022 is estimated to be RM390,000 and are absorbed based on machine hours. The cost accountant has further analysed total fixed overheads into the following: Activities Production overheads (RM) Set-up 80,000 Materials handling 180,000 Quality inspection 130,000 Required: (a) Compute the profit per unit of Gold Bar and Gold Coin respectively using: (1) the absorption costing system: (7 marks) (11) the activity-based costing system. (8 marks) Note: All answers are to be rounded to two decimal places. (b) Based on the calculations in part (a) above, explain how activity-based costing may help Bless Sdn. Bhd. to improve profitability of each of the products. (10 marks) [Total: 25 marks)

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