Accounting 9706 · AS & A Level · Activity based costing (ABC)

Activity based costing (ABC) — practice question

Section B: Cost and Management Accounting. Refer to Source B1 in the insert.
(a)[2]

Calculate the overhead absorption rate for the business.

(b)[6]

Calculate the budgeted unit cost and unit selling price for each product.

(c)[3]

Calculate the budgeted total profit of D Limited for the next year.

(d)[7]

Calculate the budgeted unit cost and unit selling price for each product using ABC.

(e)[2]

Explain why the budgeted selling price changes between (b) and (d) for each product.

(f)[5]

Advise the directors on whether they should make the change or not. Justify your answer using financial factors only.

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