1. Precision Rings Global Inc. (PRG) produces two types of rings, Steel rings and Plastic rings. These rings are highly useful in machine industry. Their financial information is given as below: Total Production (in units) Selling price (Rs. per unit) Raw material used (Rs. Per unit) Direct Labour Cost (Rs. per unit) Overhead (Rs. Per unit) Selling and Administrative cost per unit Steel Rings 80000 Plastic Rings 60000 40 30 18 8 4.5 7.2 10 10 2 3 PRG faced stiff competition in the market. Therefore, it decided to revisit the existing cost system. It identifies that Activity Based Costing (ABC) system will be able to provide an exact cost for its products. Under new ABC system, PRG identifies the two activities (Supervision, and Inspection) necessary for its activities. The total cost incurred for each activity is identified as Rs. 1,10,000 for Supervision and Rs. 12,90,000 for Inspection activities. It was also found that Direct labor hours (DLH) could be a suitable cost driver for Supervision. Similarly, the total number of inspections is suitable for the assignment of Inspection activity cost. The level of activities required for both types of rings is given below. Steel Rings 0.75 DLH/unit 60000 DLH 40000 inspections Plastic Rings 1.2 DLH/unit 72000 DLH 60000 inspections 1.1. Calculate profit for each product category considering the existing costing system. 1.2. Calculate the profit (for each product category) considering the proposed ABC system. 1.3. Given a situation where PRG is utilising only 80% of its installed capacity for each product. The current output level is only 80 percent of their earlier planning and the total of installed overhead cost is Rs. 14,00,000 (Rs. 1,10,000 for Supervision and Rs. 12,90,000). Other things remain unchanged. What will be its new profit (for each Marks (5+10+5=20) product category) from both products categories?