ABC Ltd makes three products and applies overhead using a predetermined rate based on direct labour hours. The management accountant of this company recommended switching to activity-based costing (ABC). The following activities, cost drivers, and costs are identified and estimated for 2021. The company also estimated 1,000 labour hours (wage rate = 10/hour) would be worked. Activity Production setup Order processing Materials handling Annual estimates Recommended cost Costs Activities driver Number of production 50,000 100 runs Number of orders 10,000 200 Pounds f materials 30,000 15,000 used Machine hours 100.000 10,000 Number of inspections 50,000 100 Number of units shipped 60,000 10.000 300,000 Equipment depreciation and maintenance Quality management Packing and shipping Total estimated overhead The following activities occurred in 2021. Product A Product B Product C Number of units produced 2,000 1,000 500 Direct materials costs 3,000 6,000 5,000 Direct labour hours 500 300 200 Number of production runs 35 45 Number of orders 55 105 40 Pounds of materials used 8,500 1,500 5,000 Machine hours 5,500 3,000 1,500 Number of inspections 35 40 25 Number of units shipped 2,500 2,000 5,500 20 (b) Using the information provided above: Calculate overhead allocation rates for each of the cost drivers recommended by the management accountant, as well as the absorption allocation rate for direct labour hours. (10 marks) (ii) Using the activity allocation rates calculated in (b) (i), estimate the production costs for each product for 2021. A (21 marks) (iii) Using the absorption allocation rate calculated in (b) (). estimate the production costs for each product for 2021. (3 marks) Discuss which product(s) is likely to be over-costed. (1 mark, max 35 words) (c) Discuss whether and why you agree (or disagree) with the management accountant's suggestion to switch to ABC. (6 marks: max 210 words)