Question

Businesses should ensure they price their goods and services reasonably to retain competitive advantage. An accurate method of costing is important as it can assist a business to determine a fair price for their final product.

With the above in mind, the CEO of GoGo Airlines has provided you with the following information:

Total Overheads = £200,000

Total Machine Hours = 100,000

Product:	Vegan Meal:	Non-vegan Meal:
Units of Production	300,000	450,000
Material Cost per meal	£10	£12
Labour Cost per meal	£8	£10
Machine Hours per meal	1/30	1/5

	% Overheads
Set-up Costs	20
Inspections	60
Delivery costs	20

	Vegan Meal:	Non-vegan Meal:	Total:
Set ups	100	500	600
Inspections	500	200	700
No. of Deliveries	400	800	1200

You are required to calculate the unit costs of the vegan and non-vegan meals using:

• Traditional costing using machine hours as the basis of allocation of costs and
• ABC system

Answer 1

I have answered the question below by hand

Please up vote for the same and thanks!!!

Do reach out in the comments for any queries

Answer: