Could you help Olivia prepare another PowerPoint slide (or two)? She would like to show the CFO why the unit cost for fresh lobster rolls differs so much under the traditional costing system versus under the activity-based costing system. Olivia hopes that she can convince the CFO that they should switch to the activity-based costing system for internal purposes.

Olivia has identified four activity cost pools and decided the distribution of overhead costs (manufacturing, administrative, and selling) across the four pools below: Activity Cost Pools Manufacturing overhead Fixed selling expenses Total administrative expenses Supporting Order Customer direct labor processing accommodations 30% 10% 40% 10% 55% 25% 5% 25% 10% Organization sustaining 20% 10% 60% Total 100% 100% 100% Information on the costs associated with the four activity cost pools can found in the traditional income statement on the previous page. Product-specific data: Units sold Unit selling price Direct materials per unit Direct labor hours unit Direct labor rate (per direct labor hour) Predetermined overhead rate (per direct labor hour) Variable selling expenses per unit Fresh Frozen 12,000 20,000 $55 $75 $20 $20 0.2 0.2 $30 $30 $50 $50 $2 $10 per Data from the activity-based costing system: Activity cost pool Activity measure Supporting direct labor Number of direct labor hours Order Processing Number of purchase orders Customer accommodations Number of customer requests Organization sustaining Not applicable Expected activity Fresh Frozen Total 2,400 4,000 6,400 300 200 500 200 0 200 $2,160,000 Mainely Lobster Income Statement Year Ended December 31, 2021 Sales Cost of goods sold Direct materials $640,000 Direct labor $192,000 Manufacturing overhead $320,000 Gross margin Selling and administrative expenses Variable Selling expenses 224,000 Fixed Selling expenses 250,000 Total administrative expenses 160,000 Net operating income 1,152,000 1,008,000 634,000 $374,000