task+ info

answer should be in this format if is it ok

Fabien Ltd - continued: The finance office (cost and management accounts) recently performed an 'activity - based production systems analysis for the fixed production overheads. The result is the table below: Total cost Indirect Cost driver Cost driver production overhead quantity per period recovery rate E Set up costs 10,000 Set ups 140 71.43 Production scheduling 3,200 Set ups 140 22.86 Quality control 17,300 Inspections 2,500 6.92 Depreciation 9,200 Machine hours 1,000 9.20 Raw materials storage 1,800 Materials movements 1,800 1.00 Total: 41,500 A further analysis has produced the following indirect production overhead resource required for each product: Activity - Based Resource (Cost driver quantity) Requirement (by product) Order 1101 Order 1102 Order 1103 Order/product: Total 'Sky' 'Sun' Moon Set ups 45 45 15 Inspections 1,000 800 1,190 2,990 320 420 250 Machine hours 990 900 500 Materials movements 1,800 105 400 Task 5: a. Explain 'Activity-Based Costing (ABC)' as an alternative to full absorption costing and discuss the potential benefits that ABC might bring to production and information systems of Fabien Ltd Note: Your written explanations should be effectively communicated and should include notes on: The reasons for the development of ABC The 'Activity - Based' concept The process of an ABC system development The potential benefits (if any) you feel could be achieved by the introduction of an ABC system for Fabien Ltd 10 Marks b. Recalculate the gross profits (by product an in total) after allocating fixed production overheads to products using an activity-based system 10 Marks The task 5 b. mark include marks allocated to short descriptive notes to workings (