Activity Based Costing - Exercise 2.0

JrCheffeya lagi is in the business of producing cakes for various events. Currently she is making 2 kinds of custom made cakes to her client, birthday cake and wedding cake.

Below are the cost related to the production of both cakes;

	Birthday cake	Wedding cake
DM – Flour	RM6	RM10
DM - Sugar	RM3	RM5
DM - Fruits	RM8	RM12
DL	RM30	RM50
Units produced/mth	450	350
Machine OH cost/mth	RM50,000
Quality control OH cost/mth	RM12,000
Production machine hours	300	400
No of inspection	300	800

Note that the selling price for birthday cake is RM180 and Wedding cake is RM300.

Required:

Calculate cost of production using traditional costing and Activity Based Costing.

Comment whether the pricing decision for the above cakes are appropriate.

This is your exercise 1 and need to be submitted. Make sure you make a copy before hand it in.