Question 1: (40 marks)

Hydra Ltd manufactures plastic components for the car industry. The following budgeted information is available for three of their key plastic components:

	X	Y	Z
	per unit	per unit	per unit
Selling price	400	366	350
Direct materials	100	80	70
Direct labour	60	70	60
Direct labour hour per unit	3	4	5
Units produced and sold	20,000	30,000	36,000

The total number of activities for each of the three products for the period is as follows:

	X	Y	Z
Number of purchase requisitions	2400	3600	4000
Number of set ups	480	520	600

Overhead costs have been analysed as follows:

Receiving/ inspection quality assurance	2,400,000
Production scheduling/ machine set up	1,200,000

Required:

1. Calculate the cost per unit for each product and budgeted profit unit for each product using the traditional costing methods. (10 Marks)

2. Calculate the cost per unit for each product and budgeted profit per unit for each product using the ABC costing methods. (18 Marks)

3. Compare and contrast traditional costing method and the ABC costing method. (12 Marks)