QUESTION $3(20$ Marks$)$

REQUIRED

Use the information provided below to answer the following questions:

$3\mathrm{.}1$ Calculate a single overhead rate for the entire plant using machine hours as the basis for

allocation. $(3$ marks$)$

$3\mathrm{.}2$ Calculate the overhead cost per unit for each product using activity$-$based costing $($ABC$).(17$ marks$)$

INFORMATION

Villa Ltd manufactures two products viz. Product A and Product B$.$ The budgeted costs and estimated

operating information are as follows:

Budgeted costs:

R

Machine set$-$ups $300000$

Depreciation $200000$

Materials handling $100000$

Materials procurement $90000$

Maintenance $400000$

Operating information:

Product A Product B

Area: Square meters $2400016000$

Material usage $($kg$)160009000$

Machine set$-$ups $18001200$

Material purchase orders $200100$

Number of machine hours $150005000$

Number of products $2500020000$