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What results does this show of the traditional system based on labour hours and those of the activity-based costing system in the circumstances of Hugo Coast Ltd.

1)a) 60000016000 = 100 660 000/4 800 = 137.5 275/2 _ 240 000/1 200 = 200 5x100=500 5x 137.5 =687.5 _ 5x200= 1000 Total hours of labour = 660,000 + 600,000 + 240,000 = 1,500,000 Overheads based on direct labour of hours = 36,000,000/1,500,000 = 24 Overheads based on direct labour of hours 24 x100 = 2.400 24x137.5=3300 _ 24x200=4800 Basic (E) Advanced (E) Pro (E) Material cost per 1200 1800 2700 unit Labour cost per 500 687.50 1000 uni Overheads 2400 3300 4800 absorbed per unit TOTAL 4100 5787.50 8500 Selling price 12000 18000 24000 Profit per unit 7900 12,212.50 15500 Total profit 47400000 58620000 18600000 = $124620000 1)b) Number of Number of set-ups Number of Production Runs orders packaged BASIC 300 105 1200 ADVANCED 240 120 900 PRO 210 75 300 TOTAL 750 300 2400 BASIC Production scheduling (7200000/750) x300 = 2880000 Machine set up 18000000/300) x105 = 6300000 Packaging 10800000/2400) x1200 = 5400000 ADVANCED Production scheduling 7200000/750) x240 = 2304000 Machine set up 7200000/300) x120 = 7200000 Packaging 7200000/2400) x900 = 4050000 PRO Production scheduling 7200000/750) x210 = 2016000 Machine set up 7200000/300) x75 = 4500000 Packaging 7200000/2400) x300 = 1350000Production Machine set up Packaging TOTAL scheduling BASIC 2880000 6300000 5400000 14580000 ADVANCED 2304000 7200000 4050000 13554000 PRO 2016000 4500000 1350000 7866000 TOTAL 7200000 18000000 10800000 36000000Overheads absorbed per unit Basic 14580000/6000 = 2430 Advanced 13554000 / 4800 = 2823.75 Pro 7866000 / 1200 = 6,555 Basic (E) Advanced (E) Pro (E) Material cost per 1200 1800 2700 unit Labour cost per 500 687.50 1000 unit Overheads 2430 2823.75 6555 absorbed per unit TOTAL 4130 5311.25 10255 Selling price 12000 18000 24000 Profit per unit 7870 12,688.75 13745 Total profit 47220000 60906000 16494000 Total profit of whole company= 47220000 + 60906000 + 16494000 = $124,620000

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