Sonotec company Ltd is into the manufacture of variety of hand-crafted window frames for schools. The company?s

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Question:

Sonotec company Ltd is into the manufacture of variety of hand-crafted window frames for schools. The company?s manufacturing activities and related data for the current year are as follows:

Cost (activity) Driver Manufacturing Activity Material Handling Cutting Assembly Wood Staining Overhead Cost (?) 800,000 2,40

Two styles of window frames were produced in July, a wood window frame with fewer parts and a metal window frame that required no staining activities. Direct labour is paid ?25 per hour. Quantities, direct materials costs, and other data are as follows:

Units Produced Direct Machine Material (?) Hours Number of Direct Parts Labour Hours 200,000 12,000 20,000 6,000 Wood window

The company?s current traditional basis (system) of overhead allocation shows that the total manufacturing unit costs for the wood window frame is ?245, while that of metal window frame is ?330.

Required:?

(i) Calculate the cost allocation rates, total manufacturing costs and unit costs of the wood and metal window frames using Activity Based Costing (ABC) approach.

(ii) Assume that nonmanufacturing activities, such as product design, were analysed and allocated to the wood window frame at ?10 each and the metal window frame at ?15 each. In addition, similar analyses were conducted of other nonmanufacturing activities such as distribution, marketing and customer service. The support costs allocated were ?50 per wood window frame and ?80 per metal window frame. calculate the product cost per unit by including the nonmanufacturing costs.