Question 2 Having attended a Management Accounting course on Activity-Based Costing (ABC), you decided to apply the principles of ABC on the four products currently made and sold by your company. Details of the four products and relevant information are given below for one period: Products A B C D Output in units 120 100 80 120 Costs per unit Direct material $40 $50 $30 $60 Direct labor $28 $21 $14 $21 Machine hours (per unit) 4 3 2 3 The four products are similar and are usually produced in production runs of 20 units and sold in batches of 10 units. The production overhead is currently absorbed by using a machine hour rate, and the total of the production overhead for the period has been analyzed as follows: Machine department costs (rent, business rates, depreciation and supervision) Set up costs Store receiving Inspection/Quality control Materials handling and dispatch $10,430 1300. 5,250 3,600 2,100 4,620 26,000