David Cooper founded Acers Company, a company specializing in embroidery, a year ago. He was looking at the financial statement for January, February, March this year (2023) and wondering why their profit was decreasing even though their sales were increasing. Their costs had remained stable and the only difference he noticed was that customers seemed to be redesigning what they wanted embroidered to encompass more colours. Most of the increases in revenues came from new customers. For quoting orders, David determined their costs for embroidering a logo on a T-shirt are as follows: The manufacturing overhead was estimated using last year's financial statements. The selling price was then determined by taking the total cost and adding a 30% markup. There is a total of 2 employees including himself and he paid himself $20 per hour. They can embroider 10 shirts per hour. For jobs that require additional colours, it will take 6 minutes to set up and each colour change requires 12 minutes of labour to reconfigure the embroidery machine. The largest amount if time is taken up by the design work. Each new design or redesign of a logo requires 4 hours of their time to produce the electronic code required for the embroidery machine. The administrative cost for each order is $0.70. David received requests from 4 customers this morning and he needs to generate a quote for each of them. Two of the jobs are for repeat customers who do not need any design work, and of the other two, one is for a repeat customer who wants to redesign the logo and the other is a brand new customer who will need the logo designed before any work can be done. The jobs also have different colour requirements and volumes as follows: Job 1 : repeat customer ( 2 colours; 25 shirts) Job 2 : repeat customer ( 5 colours; 200 shiprts) Job 3 : repeat customer with a redesign ( 2 colours; 200 shirts) Job 4 : new customer ( 5 colours; 25 shirts) Based on the traditional way of quoting, each short would be $9.50. David is considering to change Color Change: For each color change, it takes 12 minutes of labour to reconfigure the embroidery machine. This also means that they can do 5 changes per hour. Job 1 \& 3 need 2 colors which require 1 change and Jobs 2 \& 4 have 5 colors which require 4 changes. Design/Redesign of logo - It takes 4 hours to make a redesign - This will only apply if the job requires a design or redesign Administrative cost for each order is $0.70 Compute the amount for each quote using Activity Based Costing approach, and explain whether you would commend Acer to use abc in their future quotation. Do you have any suggestion for David to improve costs based on the ABC analysis? David Cooper founded Acers Company, a company specializing in embroidery, a year ago. He was looking at the financial statement for January, February, March this year (2023) and wondering why their profit was decreasing even though their sales were increasing. Their costs had remained stable and the only difference he noticed was that customers seemed to be redesigning what they wanted embroidered to encompass more colours. Most of the increases in revenues came from new customers. For quoting orders, David determined their costs for embroidering a logo on a T-shirt are as follows: The manufacturing overhead was estimated using last year's financial statements. The selling price was then determined by taking the total cost and adding a 30% markup. There is a total of 2 employees including himself and he paid himself $20 per hour. They can embroider 10 shirts per hour. For jobs that require additional colours, it will take 6 minutes to set up and each colour change requires 12 minutes of labour to reconfigure the embroidery machine. The largest amount if time is taken up by the design work. Each new design or redesign of a logo requires 4 hours of their time to produce the electronic code required for the embroidery machine. The administrative cost for each order is $0.70. David received requests from 4 customers this morning and he needs to generate a quote for each of them. Two of the jobs are for repeat customers who do not need any design work, and of the other two, one is for a repeat customer who wants to redesign the logo and the other is a brand new customer who will need the logo designed before any work can be done. The jobs also have different colour requirements and volumes as follows: Job 1 : repeat customer ( 2 colours; 25 shirts) Job 2 : repeat customer ( 5 colours; 200 shiprts) Job 3 : repeat customer with a redesign ( 2 colours; 200 shirts) Job 4 : new customer ( 5 colours; 25 shirts) Based on the traditional way of quoting, each short would be $9.50. David is considering to change Color Change: For each color change, it takes 12 minutes of labour to reconfigure the embroidery machine. This also means that they can do 5 changes per hour. Job 1 \& 3 need 2 colors which require 1 change and Jobs 2 \& 4 have 5 colors which require 4 changes. Design/Redesign of logo - It takes 4 hours to make a redesign - This will only apply if the job requires a design or redesign Administrative cost for each order is $0.70 Compute the amount for each quote using Activity Based Costing approach, and explain whether you would commend Acer to use abc in their future quotation. Do you have any suggestion for David to improve costs based on the ABC analysis