3. ABC Problem. Must Show Work! (10 points) Spreadwell Paint Company manufactures two high-quality paints: an oil-based paint and a latex paint. Both are house paints and are manufactured only in a neutral white color. Spreadwell sells the base paints to franchised retail paint and decorating stores where pigments are added to tint (color) the paint as the customer desires. The oil-based paint is made with organic solvents such as mineral spirits or turpentine. The latex paint is made with water, synthetic resin particles are suspended in the water, and dry and harden when exposed to air. After analyzing the company's entire operations, Spreadwell's accountants and production mangers have identified activity cost pools and accumulated annual budgeted (estimated) overhead costs by pools as follows: Activity Cost Pools Purchasing Processing Packaging Testing Estimated Overhead $110,000 1,800,000 680,000 210,000 Following further analysis, activity cost drivers were identified and their estimated use by product and activity were scheduled as follows: Estimated Cost Estimated Use of Activity Cost Drivers per Drivers per Product Pools Cost Drivers Activity Oil-Based Latex Purchasing Purchase orders 1,100 orders 600 500 Processing Gallons processed 1,000,000 gallons 450,000 550,000 Packaging Contains filled 800,000 containers 475,000 325,000 Testing Number of tests 5,000 tests 2,800 2,200 Spreadwell has budgeted 300,000 gallons of oil-based paint and 700,000 gallons of latex paint for processing during the year. Instructions: A. Prepare a schedule showing the computations of the ACB overhead rates. B. Prepare a schedule assigning each activity's overhead cost pool to each product C. Compute the overhead cost per product