3 Omega Pte Ltd manufactured two models of clocks: Standard and Trendy. The standard clock sells for $8 and Trendy sells for $10. The company is planning production for the next period and the Marketing Director wanted to know how profitability of each model. The following were the overhead costs and cost drivers. Expected Actual Overhead Item Expected Cost Cost Driver Transactions Setup costs $96,000 Number of setups 200 Purchasing costs $64,000 Number of purchases 2,000 Maintenance costs $120,000 Machine hours 12,500 Electricity $32,000 Kilowatt-hours 40,000 The following data is retrieved for the jobs completed. Standard Trendy Direct materials $1,800 $500 Direct labor $1,500 $450 Units completed 800 250 Direct labor hours 50 10 Number of setups 1 2 Number of purchases Machine hours Kilowatt-hours 4 5 220 25 12 30 285 The company practical activity is 4,000 direct labour hours. (a) (b) (c) Compute the unit cost for the Standard and Trendy clocks using direct labour hours to apply overhead. $9/unit $6.92/unit (8 marks) Compute the unit cost for Standard and Trendy clocks using activity-based costing system. $5.14/unt $9.34/unit (12 marks) Explain which costing method gives the Managing Director a more accurate picture of the cost and profit margin