2: ABC Costing OEM Company manufactures and sells two Models of Laser Photocopy Machines, P1 and P2. It sells P1 for $2,000 and P2 for $2,500 each. According to the marketing department's report, the sales agents sell P2 very quickly but struggle to sell any P1. They have invited a management accountant consultant to review their current costing and pricing policies. The management accountant consultant recommends reducing the sale price of P1 and increasing the sale price of P2. The company currently uses traditional costing systems. It used the number of productions to allocate overhead costs. You have been asked to prepare a costing report using traditional absorption costing and activity-based costing (ABC) to determine the accurate production costs for these two products and express your view regarding the recommendation made by the consultant. The available information concerning the last month's operations appears below: From the centre's management information system, you extract the following information on activities, costs, and activity drivers for the current period: Units produced Materials: Number of parts Price part per part Direct labour The time needed per unit (minutes) Labour hour rate Activity Machine set-up Materials ordering Machine hours Injection moulding No of Product design Product movements Customer order Online monitoring security (hours) Total Overhead Pl P2 19,283 9,251 12 23 $36 $51 14 27 $21 $26 Expected Cost $15,433 $519,264 $341,992 $11,940 $26,496 $16,683,516 $2,150,052 $149,150 $19,897,843 Cost hierarchies P1 P2 No. of machine set-ups No. of material orders Machine hours Injection moulding (batches) Batch level 98 155 Batch level 1,592 3,817 Batch level 1,109 4,407 Batch level 10 50 No of Product design No. of product movements Product level 12 20 Product level 1,963 7,703 Customer order (number of orders) Customer level 860 4,296 Online monitoring Security (hours) Facility level 2,579 3,387