The Noosa Bicycle Co Pty Ltd manufactures two types of bikesamateur and professional. The company uses activity-based costing to allocate overhead...

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The total overhead costs were:

Handling $5,000

No of parts  6,500

Design changes  1,800

Setups  1,500 

Total $ 14,800 

Required:

a. Calculate the unit cost for each product using activity-based costing.        

b. Calculate the unit cost for each product using direct labour hours as the basis for applying overhead.       

c. Compare ABC with the traditional costing system.