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Question 1 CSR is a company which produce ABC1 and ABC2. The company normally manufacture 2000 units of a ABC 1 and 8000 units of ABC2.The direct labour cost per units as follows ABC1 Direct material Direct labour 750 110 ABC2 300 70 One of the management team has suggested to the company to calculate the product manufacturing cost using Activity Based Costing (ABC) approach. The amount of manufacturing overhead is traceable to the two products are as follows Cost Driver Demanded Product ABC 2 Activity Cost Driver Product ABC 1 Purchase Order Machine setups Machining Quality checks Maintenance No of orders No of set ups Machines hours No of inspection Machine hours Manufacturing Overhead cost 170,000 178,000 350,000 355,000 705,000 2000 200 1200 1000 1200 1000 200 800 1000 800 Required Calculate the cost allocated (or traced) to products using 1. Traditional Absorption Costing 2. Activity Based Costing