Axiom Boxes manufactures two types of cardboard boxes used in the shipping of gym equipment Hard boxes (for heavy bumper weights) and Soft boxes (for other smaller gym accessories).

In 2022, 3000 Hard boxes and 2000 Soft boxes were manufactured.

Indirect production costs incurred were $3,000,000.

Indirect costs and activities were the following:

Activity	Cost Driver	Amount ($)
Custom cutting dyes	Number of machine hours	$1,500,000
Packaging process	Number of set ups	$900,000
Printing & coating	Number of labour hours	$600,000
TOTAL		$3,000,000

The cost driver volumes for each type of box are the following:

Cost Driver	Hard	Soft
Number of machine hours	65,000	35,000
Number of set ups	12,000	13,000
Number of labour hours	20,000	10,000

Required

a. If manufacturing overhead is allocated on the basis of only machine hours for the year, calculate the predetermined manufacturing overhead rate. Show all calculations. (1 mark)

b. Allocate the indirect manufacturing overhead costs to the different type of boxes using the traditional method. Show all calculations. (2 marks)

c. Calculate the indirect activity cost rate for each activity using Activity-Based Costing (ABC). Show all calculations. (3 marks)

d. Allocate the indirect manufacturing overhead costs to the two different boxes using ABC. Show all calculations. (6 marks)

e. When using ABC (per part d) as compared to the traditional method (per part b) discuss why it is more appropriate for Axiom Ltd to use ABC by highlighting the extent of any difference and the reason for any difference. (2 marks