also part of question D:Assume that Drilling Innovations expects to produce a gross profit margin on each product of at least 30 percent of the selling price.Please include in your answer the basic differences between volume-based (traditional) overhead application procedures and the ABC method. Describe the characteristics of products which would suggest it would be better to use ABC as an indirect cost allocation method over a traditional method such as direct labor hours.

ATC 51 Business Applications Case Using ABC to impravepraduct casting Drilling innovations Inc. produces specialized cutting heads used by companies that drill for oil and natural gas. The company recently implemented an ABC system for three of its products and is interested in evaluating its effectiveness before convening to an ABC system for all of its products. To perform this evaluation the company has compiled data for the three products using both the traditional system and the new ABC system. The traditional system uses a single driver (machine hours). The ABC system uses a variety of cost drivers related to the activities used to produce the cutting heads. The three products involved in the trial run of the ABC system were GS l 57, HS241, and OS367. The following data relate to these products. Page 248 total Costs Selllng Allocated: Cost per Unit: Total Cost Cost per Prlce per Unlts Tradltlonal Tradltlonal Allocated: Unit Product Unit Produced Costlng Costing ABC ABC 65-157 $19.30 120.000 $1,600,000 313.3333 $1,500,000 312.5000 H5241 17.50 90.000 1,100,000 12.2222 1,050,000 11.6667 05-367 15.10 40.000 400,000 10.0000 550.000 13.7500 Totals $3,100,000 $3,100,000 a. Determine the gross prot margin for each product produced based on the ABC data [(Sclling prioc - ABC cost per unit) X Units produccd]. b. Determine the gross prot margin for each product produced based on the traditional costing data [(Selling price - Traditional cost per unit) >