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20 Open Question 2 (15 points in total) 25 Lotus Company produces two products: Deluxe and Regular. Lotus plans to produce and sell 4,400 units

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20 Open Question 2 (15 points in total) 25 Lotus Company produces two products: Deluxe and Regular. Lotus plans to produce and sell 4,400 units of Regular and 2,500 units of Deluxe in 2021. Lotus has used for long time a single, facility-wide overhead allocation rate. Specifically. overhead costs are currently allocated to Regular and Deluxe using direct labor costs as allocation basis. The controller of the company believes that Lotus can make better process Improvements if it uses disaggregated cost information. Lotus Company budgeted Information for 2021: ided equal Regular Deluxe Total pany will no Direct costs: profit comp pany will ch Direct labor C105,600 (105,060 C210,660 Direct materials E160,500 E310,250 C470,750 Overhead: 500 Administration C25,126 Quality inspections C227.060 net of Tax - Prefer Machine setup (171,180 utstanding Share Machine-hours C124,350 worked Overhead allocated E274.560 (273,156 E547.716 under current system (single rate) Number of units 4,400 2.500 Number of 5 35 Inspections Kea Corporation Number of setups 15 45 Cash Flow Stateme ear ended Dec. 31, ting activities: Machine-hours 3.960 3.000 Lotus operates at capacity. The proposed allocation bases (Le. cost drivers) for overhead are as follows: sets and liabilities: expenses receivable Activity Cost driver da receivable ayable - short-term ts payable Administration Number of units ed) by operating active Quality inspections Number of inspections Machine setup Number of setups Machine-hours worked Machine-hours ances in the allocate octivity-based syst ed coating con impro a) Compute the allocated overhead cost per unit of Regular using activity-based costing. Show your calculations, rounding the solutions to two decimals. (10 points)

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