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XYZ Ltd manufactures two products, Papa and Quebec. Monthly data relating to production and sales...

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XYZ Ltd manufactures two products, Papa and Quebec. Monthly data relating to production and sales are as follows: Product Papa Product Quebec Direct material cost per unit N$15 N$20 Direct labour hour per unit 1 hour 2 hours Direct labour cost per unit N$20 N$40 Sales demand 100 units 950 units Production overheads are N$200,000 each month and are absorbed on a direct labour basis. The overhead absorption rate (CAR) is N$100 per direct labour hour. The management accountant has produced a report on the potential value of ABC as a preferred alternative to the traditional absorption costing system, and has found that there are five (5) main areas of activity that can be said to consume overhead costs. The management accountant has gathered the following monthly information: # Activity Cost driver Product Total Number Papa 1 Setting up Machining Order handling Quality control Engineering Total Cost N$ 20,000 80,000 20.000 20.000 60,000 200.000 Number of setups Machine hours Number of orders Number of inspections Engineering hours 4 2.000 4 5 1.000 100 1 1 500 Quebec 3 1,900 3 4 500 Required: Using ABC, calculate the costs, in total and per unit, for Product Papa and Product Quebec

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