Businesses should ensure they price their goods and services reasonably to retain competitive advantage. An accurate method of costing is important as it can assist a business to determine a fair price for their final product. With the above in mind, the CEO of GoGo Airlines has provided you with the following information:

Total Overheads = £200,000

Total Machine Hours = 100,000

You are required to calculate the unit costs of the vegan and non-vegan meals using:

• Traditional costing using machine hours as the basis of allocation of costs and

• ABC system

• Traditional costing using machine hours as the basis of allocation of costs and

• ABC system

In addition, you are also required to:

• Discuss the importance of accurate costing in supporting the financial decision process

• Compare the traditional costing system to the ABC system and

• Recommend, with reasons, which of the two costing systems is most appropriate for the airline sector