Question 1 Barry Electronics Ltd makes three main products, using broadly the same production methods and equipment for each. A conventional product costing system is used at present; although an activity based costing (ABC) system is being considered. Details of the three products for a typical period are: Hours per unit Materials Labour Machine Per unit Units Product X 1 $20 750 Product Y Product Z 1 1 $12 1,250 1 3 $25 7,000 Direct labour costs $6 per hour and production overheads are absorbed on a machine hour basis. The rate for the period is $28 per machine hour. Further analysis shows that the total of production overheads can be divided as follows: Costs relating to set-ups Costs relating to machinery % 35 I 20 15 30 Costs relating to materials handling Costs relating to inspection The following total activity volumes are associated with the product line for the period as a whole. Number of set-ups Number of movements of materials Number of inspections Product X Product Y Product Z 75 115 12 21 150 180 480 87 670 Required: a. Calculate the cost per unit for each Barry Electronics Ltd product using conventional (9 marks) method. Show ALL workings. b. Calculate the cost per unit for each Barry Electronics Ltd product using Activity Based Costing principles. Show ALL workings. (21 marks) (Total 30 marks) LG