Case Study - 3 Sallan Industrial Investment (SII) LLC is one of the leading FMCG manufacturing company in Oman based in Sohar Industrial Estate, Sohar. It produces a wide range of home care and personal product including high foam detergent powder under the brand names Sana and Ideal. The cost records of the company reveal the following information for the month April 2020: Product Sana Ideal 30,000 10,000 325 Output (in units) Selling Price per unit (in RO) Direct material @ RO 6.50 per kg Direct Wages @ RO 5 per hour No. of quantity produced per batch Setup time per batch (Hours) The Indirect costs for the month are as under: Factory Wages 137,600 Stores Receiving Costs 17,150 Set up costs 155,000 Material Handling Costs 318,000 Shipment costs 40,000 Inspection Costs 20,250 At present, the company absorbs the indirect costs based on the output. The Management Accountant of the company, after making a rigorous analysis of the data, decided to shift from the absorption technique to Activity Based Costing technique and also to treat factory wages as direct cost. The Management accountant identified RO 90,000 for product Sana and the balance for product Ideal. The data relevant to activities and products are as follows: Product Sana 70 Activity Cost Pool Stores Receiving Costs Material Handling Costs Shipment costs Inspection Costs Ideal 30 3000 Cost driver Requisitions raised Orders Executed Number of Shipments No. of Inspections Setup hours Direct labour hours 4500 150 4500 2250 Setup Costs Factory Wages Required: a) The total cost and profits of both the products based on the absorption costing technique. (3 Marks) b) The total cost and profits of both the products assuming the indirect costs are absorbed based on activity based costing and also assuming factory wages as direct cost. (4 Marks) c) The amount of cost distortion for each product and give your opinion on the decision of the Management Accountant. (50-100 words)