(a) Rainbow Plc is a company that produces two gift products. A wine hamper that sells for £150 and a fine wine and choc

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A Rainbow Plc Is A Company That Produces Two Gift Products A Wine Hamper That Sells For 150 And A Fine Wine And Choc 1 (55.48 KiB) Viewed 39 times

(a) Rainbow Plc is a company that produces two gift products. A wine hamper that sells for £150 and a fine wine and chocolate hamper that sells for £200 In the year ending 31 December 2020 total overhead costs of £700,000 were allocated based on direct labour hours A total of 15,000 direct labour hours were required last year to create 15,000 wine hampers and 10,000 direct labour hours were required to create 10,000 Total direct labour and direct materials costs for the year were as follows: Wine Hamper (1) Direct Material Direct Labour Selling Price per unit 540,000 600,000 150 Wine and Chocolate hamper (2) 320,000 400,000 200 Activity Production runs Overhead cost 50,000 Cost Driver Number of production runs Inspection hours Number of units shipped Quality Inspection Packaging and shipping 450,000 200,000 Activity Wine Hamper Wine and Chocolate hamper 100 400 Production runs Quality Inspection Packag and shipping 1,200 hrs 7,800 units 3,000 hrs 12.000 units vi 2021 © 2021 Northern Consortunud Page 6 of 8 TOOMADOI Management Accounting (1) Using Activity Based Costing calculate the overhead absorption rate (11) per unit of each product Using your answer from part() calculate the profit per unit for both (4) products, (b) Compare and contrast incremental budgeting with Zero Based Budgeting. [5]