Gogo Airlines - Businesses Assessment Answer
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 Product: Vegan Meal: Non-vegan Meal: Units of Production 300,000 450,000 Material Cost per meal £10 £12 Labour Cost per meal £8 £10 Machine Hours per meal 1/30 1/5 % Overheads Set-up Costs 20 Inspections 60 Delivery costs 20 Vegan Meal: Non-vegan Meal: Total: Set ups 100 500 600 Inspections 500 200 700 No. of Deliveries 400 800 1200 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
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