BoConcept manufactures and sells interior. Susanne is a manager at BoConcept and introduces two new designer sofas, the Kuta and the Crane The manufacturing cost of each sofa is calculated using activity-based costing. BoConcept has one direct manufacturing cost category and five indirect cost pools in the manufacturing department Indirect cost pools Allocation base Parts Assembly hours machine inserted parts manually inserted parts testing time Allocation rate 1 Material Handling 2 Assembly Management 3 Machine insertion of parts 4 Manual insertion of parts 5 Quality testing 3.50 35.00 0.90 35.90 40.00 Product characteristics are as follows Kuta Crane Direct Material Parts Assembly hours machine inserted parts manually inserted parts testing time in hours $132.00 $151.80 14 28 2 3 23 1.5 Susanne has just received some news. York polster has introduced a new designer sofas series, too. Given their announced selling price, Susanne estimates York's top end sofa to have manufacturing cost of under 1.000. She calls a meeting of product designers and manufacturing personnel and announces that 999 must become the new target cost for the Kuta sofa. The product designers come up with the following redesign of Kuta Kuta *new* Direct Material 143.00 Parts 26 Assembly hours machine inserted parts manually inserted parts testing time in hours 6 19 1.5 Required: a) Calculate the manufacturing costs of Kuta and Crane using the original production data [12 marks] b) Calculate the revised manufacturing cost of Kuta using data from the suggested redesign. How do they compare to the target cost? Explain the differences between the original design and the revised design data of the Kuta [12 marks] c) Discuss how Susanne can achieve target costs using activity-based management? [8 marks] d) Susanne is thinking about extending the ABC approach to the design department as well in order to safe costs. Do you think ABC will be very effective in the design department? 18 marks]