(a)[3]
Explain the meaning of ‘activity based costing’ (ABC).
(b)[1]
Calculate the overhead absorption rate when one overall rate is applied.
(c)[7]
Prepare the budgeted statement of profit or loss for each product assuming absorption costing is used.
(d)[7]
Prepare the budgeted statement of profit or loss for each product assuming ABC is used.
(e)[7]
Advise the directors whether the ABC system ought to be adopted when setting selling prices for the coming years. Support your answer with reference to (c) and (d).