12 Question 3 Belknap Manufacturing has approached you, a CGA, with a problem. The company makes two products: A12 and B15. Demand for B15 has been overwhelming; there is virtually no compctition for this item and several customers have offered to pay up to S48.00 for this product, which Belknap has priced at $27.00 per unit. The prime cost of manufacturc for B15 is $6.26. Fatima, the company president, is puzzled since the demand for B15 has not resulted in increased company profitability. The company's costing system assigns overhead to the products based on direct labour-hours. The following information has been made available to you: Overhead (OH) cost pools and activty levels for 2008: OH Cost Pool Activity Base Batches Material moves Number of orders Engineering hours Machine hours Budget (S) 24,000 90,000 210,000 200,000 162,000 Planned Activity Level Setup Material moves Order processing Engineerin,g Machine maintenance 30 batches 90 moves 140 orders 10,000 hours 18,000 hours Rate (S) 800 1.000 1.500 20 For 2008, the company anticipates a total of 27,440 direct labour-hours will be used. Planned activity fo product B15, which is produced in batches of 1,000 units, are as follows: Activity Planned Activity Level Planned production Material moves Number of orders Engineering hours Machine hours Direct labour-hours 0.000 units 20 moves 50 orders 2,500 hours 6,000 hours 5.000 hours Required Write a brief memo to Fatima explaining why product B15 has not increased Belknap's profitability Provide supporting calculations. Your memo should clearly explain why there is no apparent competition for product B15, why customers are willing to pay almost double the price per unit for this product, and what action (s) you recommend for Fatima. Your memo should be three or four paragraphs and must not exceed 350 words in length. You should perform all of the necessary calculations first and then write your mmo