1. Define what is cost pool, cost driver and overhead

2. Using traditional costing, using direct labours as a cost driver, calculate:

-Identify total direct labour hours

-calculate Overhead Absorption Rate (OAR)per labour hour

-calculate overhead cost allocated per Product A, B and C

-calculate overhead cost per unit for Product A, B and C

3. Using Activity Based Costing, calculate:

-Overhead absorption rate for each cost driver

-calculate overhead cost allocated per Product A, B and C

-calculate overhead cost per unit for Product A, B and C

4. Evaluate profitability analysis for all products using:

-Traditional method

-ABC method

2. CC Manufacturing Sdn Bhd produces and sells three types of office furniture, Product A, B and C. The cost data for both products are shown as follows: Product A RM 600 70 70 5,800 Product B RM 500 40 Product C RM 400 30 Sales price per unit Cost of direct material (per unit) Cost of direct labour (per unit) Production volume (unit) Direct labour hour 40 10.800 70.800 30 35,800 45,800 85.800 The company's accountant has identified the following activities, budgeted cost pool and activity cost driver: Activity Engineering Machine setup Machine operation Packaging Total Budgeted cost pool RM 95,800 480,000 1,080,000 70,800 RM 1,726,600 Activity cost driver Engineering hours Number of setups Machine hours Number of orders (package) The unit and transaction of actual activities for each product are shown in the following table: Activity cost driver Engineering hours Number of setup Machine hours Number of orders Level of activity Product A 5,700 400 58,000 5,800 Product B 7,080 80 80,000 8,000 Product c 8.190 80 90,000 9,000 Total 20.970 560 228.000 22.800