London Food Processing corporation (LFP. Ltd) manufactures two products: A and B. A review of the company’s accounting records revealed the following per unit costs

London Food Processing corporation (LFP. Ltd) manufactures two products: A and B. A review of the company’s accounting records revealed the following per unit costs and production volumes: A B Production volume (units) 2,500 5,000 Direct material £ 40 £ 50 Direct labor: 2 hours at £15 30 3 hours at £15 45 Manufacturing overhead: 2 hours at £90 180 3 hours at £90 270 Manufacturing overhead is currently computed by spreading overhead of £1,800,000 over 20,000 direct labor hours. Management is considering a shift to activity-based costing in an effort to improve the firm’s accounting procedures, and the following data are available: Cost Driver Volume Cost Pool Cost Cost Driver A B Total Setups £ 240,000 Number of setups 100 20 120 General factory 1,500,000 Direct labor hours 5,000 15,000 20,000 Machine processing 60,000 Machine hours 2,200 800 3,000 £1,800,000 LFP. Ltd determines selling prices by adding 30% to a product’s total cost. Required: a) Compute the per-unit cost and selling price of product B by using LFP. Ltd.’s current costing procedures b)  Compute the per-unit cost and selling price of product B under activity-based costing

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