AMA Desks Pty Ltd wants to change their costing system to the Activity Based Costing (ABC) method, there will be four (4) activities involved in manufacturing process, and the following has been decided: Estimated numbers of Cost Driver Automatic Manual Total 1500 3500 5000 500 700 1200 Manufacturing Overhead/ Indirect Cost Activity Cost Driver Estimated indirect cost Design Number of $150,000 units Cutting Number of machine set- $400,000 ups Assembly Direct Labour $650,000 hours Quality Number of $200,000 Control inspections Total $1,400,000 700 800 1500 1000 1200 2200 Required: REEDEEEEEE BRO 35a) N A. Under the Activity Based Costing (ABC) method, calculate indirect cost rate for two activities only: Design and Cutting, you can use the table below (2 marks) Indirect Cost Rate (include working) Activity Design Cutting 35b) 2 Mar! B. Under the Activity Based Costing (ABC) method, the indirect cost rate for Assembly and Quality Control has been given to you, calculate the allocation of indirect cost for Assembly and Quality Control to Automatic only, you can use the table below. (2 marks) Indirect Cost Rate Automatic (include workings) Activity Assembly $433 per hour used Quality Control $91 per inspection 350) 2 Mark C. The following has been calculated for you after using both methods, the Traditional Costing Method and the ABC Method: Traditional Costing Method ABC Costing Method Automatic $972.73 $1,037 Manual $783.12 $755 Why do the two methods provide different allocations? What method would you recommend to Tom Lee and why? (2 Marks) SERIE