Cost allocation, use of a separate machining cost pool category. (10 minutes) Azu-Cena Ltda is a manufacturer of motorcycles. Production and cost data for 2008 are as follows: 500 cc model 1000 cc model Units produced Direct manufacturing 10000 20000 labour-hours per unit Machine-hours per unit 8 A single cost pool is used for manufacturing overhead. For 2008, manufacturing overhead was 6.4 million. Azu-Cena allocates manufacturing overhead costs to products on the basis of direct manufacturing labour-hours per unit. Azu-Cena's accountant now proposes that two separate pools be used for manufacturing overhead costs Machining cost pool (3.6 million in 2007) General plant overhead cost pool (2.8 million in 2007). Machining costs are to be allocated using machine-hours per unit. General plant overhead costs are to be allocated using direct manufacturing labour-hours per unit. Required 1 Calculate the overhead costs allocated per unit to each model of motorcycle in 2007 using the current single-cost-pool approach of Azu-Cena. 2 Calculate the machining costs and general plant overhead costs allocated per unit to each model of motorcycle assuming that the accountant's proposal for two separate cost pools is used in 2007. 3 What benefits might arise from the accountant's proposal for separate pools for machin- ing costs and general plant costs