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Question 1 (20 Marks) Carey Dakey Tracing (CBT) has been in fuoc manuturing business for two years since 2018. During its first year of establishment, its only product was Butter Cake. All cakes are baked and packaged in an-diagram bom. CT Sa simpla casting system with two direct cusl categories (direct materials and direct manufacturing labour Manufacturing overtes was alocated to products using units of production as the ancation base During its second year of operation CAT noduced another product Pheaccia Layer Cain which was also package incre kilogram Loves. The precut differs from Butter Cake in which more expensive revients are used, inore direct manufacturing labour time is required and more complex man.racturing processing is used in 2012, CRT continued using its simple custing wstemin which unity of production is used to allocatentring overties of both products For 2019. company has estimated that I will incur R1421,500.00 In manufacturing overhead vost and produce 180,000 buxes of Butter Cake and 40.000 boxes of Pineapple Layer Cake. The Butter Cake requred 0.014 hours of cirect labour time per box while the Pineapple Layer Cake equired 0.02 hours Materials and labour costs per ons Wogram bax are as folows: Cost Pineapple Layer Cake RM Butter Cake RM 1.2 XALLA 0.2R Direct materials Direct labour 0.40 Since the introduction of the new product the company's profit have adly declined despite walestave been increasing rapidly. Nagement has become increasingly concerned about the accuracy of its creating system Ma AIC, Who kin charge of thing for CBT decided to 2 SA investigate the possibility of adopting activity-based costing method. After conducting a thorough discussion with operating personnel, the single manufacturing overhead cost pool was then divided into four activity areas. The following details are given: Activity Cost Estimated Expected Activity Cost Pool Driver Percentage of Butter Cake Pineapple Layer Overhead Cost Cake Mixing Labour hours 30% 600 640 Baking Oven hours 45% 64,000 86,000 Creaming Machine hours 15% 36,000 84,000 Packaging Packaging hours 10% 24,000 8,000 Required: a. Compute the product cost per unit of Butter Cake and Pineapple Layer Cake using the simple costing system. [4 marks] b. Compute the product cost per unit of Butter Cake and Pineapple Layer Cake using the activity-based costing system. [11 marks] C. Discuss two (2) reasons that may contribute to CBT's declining profits. [5 marks]