(a)[5]
Calculate, to two decimal places, the unit selling price for each product by applying traditional absorption costing.
(b)[4]
State two advantages and two disadvantages of activity based costing (ABC).
(c)[5]
Calculate, to two decimal places, the total cost per unit for each product by using ABC.
(d(i))[2]
Calculate the percentage change in the mark-up for Product B if ABC is adopted and the unit selling price stays the same as in (a).
(d(ii))[2]
Explain why this change will happen.
(e)[7]
Advise the directors whether or not they should set the selling prices in this way. Justify your answer.