Question 1 (12 marks)  
Juggernaut Holdings is introducing Product H, each of which requires 8 hours in production, 12 hours in assembly and 4 hours in despatch. Product H has direct (materials and labour) costs of $740 per unit.  
The overhead costs and direct labour hours for the three production departments are:  Production Assembly Despatch Overheads $432,000 $220,000 $140,000 Direct labour hours 12,000 10,000 7,000  
The overhead costs have been traced to cost pools and cost drivers have been identified for each cost pool. The cost pools and their cost drivers are:  
 Cost pool Cost driver Order processing 100,000 25,000  customer orders Purchasing 200,000 10,000  Purchase orders Operations 450,000 60,000  direct labour hours Distribution 42,000 5,000  deliveries  
400 units of Product H are produced. The product causes 1,000 customer orders, 700 purchase orders, 29,000 direct labour hours and 2,000 deliveries.   
    2
a. Calculate the total cost of each Product H using: i. Absorption costing using a business-wide overhead recovery rate (2 MARKS) ii. Absorption costing using departmental overhead rates (2 MARKS) iii. Activity-based costing  (2 MARKS)       
b. Explain the principles underlying the basis of calculation of each of the three above-mentioned methods and the most likely reasons for any similarity or difference between the results in applying the three methods in this case. (3 MARKS)     c.  Explain the overhead allocation problem. (3 MARKS)             Question    2    (14    marks    total)        Greentown    Industries    sells    its    transport    services    at    a    range    of    prices    to    five        different    customer    groups.    The    company    has    fixed    costs    of    $150,000    per    year.        The    average    variable    costs    for    each    transport    service,    irrespective    of    customer        group,    is    $7.    The    Table    below    shows    the    prices    charged    to    each    customer    group        and    the    quantity    of    transport    services    that    are    currently    sold    at    that    price.        Customer    group    Selling    price    Quantity    Multinational    $19    13,000    Corporate    $20    12,500    Small    business    $21    12,000    Government    $22    11,000    Private    $23    10,000        a. If    the    average    selling    price    is    $21,    calculate    the    breakeven    point    in    quantity    and    money    terms    and    draw    a    rough    sketch    of    a    costvolume-profit    (CVP)    graph    that    shows    the    relationships    between    the    elements    of    CVP.    (7    marks)                    b. Calculate    the    optimum    selling