ABC Ltd intends to manufacture two distinct products.,

ABC Ltd intends to manufacture two distinct products., Alpha and Beta. While the firm is capable of manufacturing both items, management is uncertain about the probability of either. The following are the budgeted figures:

Products Alpha Beta
Sales expected $ 27,000 $100,000
Units of prdn. expected 1000 2,000
Expected costs $15 $20
Time required for
Production 5hours 7.5hours
Batch size 100 50

AS EXPECTED, ANNUAL OVERHEADS

Activity Cost driver Total for year
Moulding mounding hours 2,000
Inspection Batches 150
prdn.mgmt products 20

Cost pool
molding P150,000
Inspection P75,000
Production management P125,000

REQUIRED
(i) Costs and profits for each product should be calculated using the ABC Costing approach

(ii) Utilize Absorption costs to determine the profit for Alpha and in Beta. Overheads are absorbed on a per molding hour basis.