QUESTION 1: HURON LTD

HURON Ltd makes shoes in two ranges such as Basic and Super. Information relating to each of these products is set out below:

	Basic	Super
Selling price per unit	180	250
Material Cost per unit	20	80
Labout time per unit	4	4
Labour rate per hour	15	15
Number of Units Produced Each Year	2,000	3,000
Cost Drivers
Number of Quality Inspections	50	350
Number of Sales Invoices Issued each year	20	180
Number of batches per total production	10	40
Machine Hours total	600	5,400

The Director of Huron Ltd has produced the following analysis of total overheads per year and their relevant cost drivers:

	Cost Pool ()	Cost Drivers
Quality Inspection	140,000	Number of Quality Inspections
Sales Invoicing	80,000	Number of Sales Invoices Issued each year
Material Handling	60,000	Number of batches per total production
Other Overheads	120,000	Machine Hours total
	400,000

Required:

Calculate full cost per unit and profit per unit for each product using:

- Traditional full cost method of overhead absorption (based on direct labour hours) (15 marks)

- Activity-based costing (ABC) method. (20 marks)

(Total: 35 marks)

paste it in digitally in answer box so can copy