QUESTION 1 Pluto plc uses a traditional activity-based costing system to assign £450,000 of committed resource costs for manufacturing activities on the basis of the following information gathered from interviews with

manufacturing personnel: ACTIVITY Moving material Setting up machines Managing quality TIME PERCENTAGE 70% 10% 20% 100% Required: a) Compute the activity cost driver rates using this system. AND Moving material Setting up machines Managing quality ESTIMATED COST DRIVER QUANTITY 7,500 kg of material 200 set ups 1,500 inspections b) Pluto decides to use Time-driven Activity Based Costing to assign the £450,000 of committed resource costs to the three activities. Compute the time-driven activity cost- driver rates assuming 12,000 hours of useful work and the unit time estimates that follow: ACTIVITY [3 MARKS] UNIT TIME (HOURS) 0.8 4 1.4 [7 MARKS] AND c) Suppose that the quantities of activities this period are 9,000 kgs of material, 160 machine set ups, and 1,200 quality inspections. Using the information and activity cost driver rates developed in b), determine the cost assigned to each of the activities, the estimated hours of unused capacity as well as the associated cost. [10 MARKS] AND d) After evaluating the information calculated for c) above, what actions might managers take? [10 MARKS]