managerial accounting

solve a.b.c

QUESTION TWO 12 Marks] [CLO 31 14 pola Mokhtar Co, sells window treatments (shades, blinds and awnings) to both Regional and local customers. The following information relates to its budited data for the current Regional Local Revenue $400,000 5580,000 Direct materials cost 30,000 50,000 Direct labour cost 100,000 300,000 The total overhead cost is $235,000. Currently, overhead is allocated to the products on the direct labour cost. Fatima, the controler does not believe the data produced by the current system and is considering implementing an ABC system. She asks her accountant to conduct some investigations and the results are as flows Estimated Activity overhead Scheduling and travel $85,000 Setup time 90,000 Supervision 60,000 Cost drivers Hours of travel Number of setups Direct labour cost The two products had the following expected use of cost drivers: Local Regional 700 500 Hours of travel ing and travel $85,000 Setup time 90,000 Supervision 60,000 Hours of travel Number of setups Direct labour cost The two products had the following expected use of cost drivers: Local Regional 700 Hours of travel 500 300 200 Number of setups $100,000 Direct labour cost $300,000 Required: a. Prepare income statements for each of the two product lines using the traditional costing system (4 Maria b. Prepare income statements for each of the two product lines using the Activity Based Costing system 16 Marks) c. Briefly explain why the performance of the two products is different under the two methods. Provide seesis examples from the data to support your armer [Insert your answers to question 2 here) T. a . 111 A 10pt :: TT * 2 For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BI V S Paragraph Arial = X X B - . =