PROBLEM 3 Pigeon Ltd makes two products, Robins and Wrens. Information relating to each of these...

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PROBLEM 3 Pigeon Ltd makes two products, Robins and Wrens. Information relating to each of these products is set out below. Selling price per unit Robins 52 Wrens 91 Annual sales volume 15,000 units 18,000 units Number of sales invoices issued each year 200 800 Labour time per unit 2 hours 5 hours Labour rate per hour 10 10 Material cost per unit 25 30 Size of each production batch 750 1,000 Bought-in parts per unit Machine set-ups per batch 22 1 5 The finance director of Pigeon Ltd has recently produced the following analysis of overheads and their relevant cost drivers. Type of overhead Cost driver Bought-in parts handling costs Number of bought-in parts 96,000 Materials handling costs Number of production batches 38,000 Sales invoicing costs Number of invoices issued 20,000 Machine set-up costs Number of machine set-ups 26,000 All other overheads Labour hours 60,000 Total overhead costs 240.000 Required: a. Calculate the total cost per unit and profit per unit for each product using: (i) the traditional full cost method of overhead absorption (based on labour hours) (4 marks) PROBLEM 3 Pigeon Ltd makes two products, Robins and Wrens. Information relating to each of these products is set out below. Selling price per unit Robins 52 Wrens 91 Annual sales volume 15,000 units 18,000 units Number of sales invoices issued each year 200 800 Labour time per unit 2 hours 5 hours Labour rate per hour 10 10 Material cost per unit 25 30 Size of each production batch 750 1,000 Bought-in parts per unit Machine set-ups per batch 22 1 5 The finance director of Pigeon Ltd has recently produced the following analysis of overheads and their relevant cost drivers. Type of overhead Cost driver Bought-in parts handling costs Number of bought-in parts 96,000 Materials handling costs Number of production batches 38,000 Sales invoicing costs Number of invoices issued 20,000 Machine set-up costs Number of machine set-ups 26,000 All other overheads Labour hours 60,000 Total overhead costs 240.000 Required: a. Calculate the total cost per unit and profit per unit for each product using: (i) the traditional full cost method of overhead absorption (based on labour hours) (4 marks)