A6. Mount Ltd Mount Ltd manufactures two types of picture frames. Both are produced in a similar way but customers can choose between standard size fames or have frames made to their own specifications. The information is as follows: Machine Annual Number Number hours output of of set- Per 100 purchase ups Frames orders Customised 4 10,000 60 30 Standard 1 100,000 120 60 The management accountant has estimated that machine related costs are 210,000, purchasing related costs are 270,000 and set-up costs are 360,000. Required: 1. Calculate the production overhead to be included in the cost of a customized and standard frame using a traditional absorption rate. 2. Calculate the production overhead to be included in the cost of a customized and standard frame using an activity-based costing system. 3. Explain why the cost of each frame is different under the two methods of allocating overheads