1. The following table lists out the overhead cost: Activity cost pool Overhead cost (£) Additional...

1. The following table lists out the overhead cost:

Activity cost pool	Overhead cost (£)	Additional Notes
Job-order set up	33,000
Procurement and placement	360,000
Installation of winding system	195,000	An auto winding system is fitted with every watch
Quality inspection (machine)	60,000
Quality inspection (manual)	21,000
Finishing	140,000	Hand-made finishing
Packaging and delivery	44,250	The company packages and delivers watches in batches containing 10 watches per batch. On an average, the packaging and delivery cost is the same for all batches (10 watches= 1 batch)
Factory cleaning services	30,000	A cost that is not consumed by any of the products

2. The company pays £8 per direct labour hour

3. The following table lists out some key figures for this firm:

*Description*	*Quantity*
Number of watches	1,500 units
Direct labour hours	7,000 hours
Machine hours	14,000 hours
Number of job orders	110
Inspection hours using machine	800 hours
Number of cycles for procurement and placement	2,400 times

i) What would be the sales price of the following two products using the ABC system if the company adds 30% mark up on total allocated costs?

Model	Luxury	Sports
Category	Female	Male
Job order number	LF-340 & LF-341	SM-119 & SM-120
Number of units	30	50
Direct materials (£ per unit)	85	55
Direct labour hours	200	250
Machine hours	225	750
Inspection hours using machine	12	40
Number of cycles for procurement and placement	50	80

Expert Solution

ekkarill92 answered 2 years ago

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