Don't copy and patse. Show your own steps please.

Prepare a report for Ingrid Krause that addresses her interest in exploring an activity-based costing (ABC) system while including the following: (a) Is Ingrid's exploration of changing her cost allocation of overhead from a traditional approach (one cost driver for allocation) to an ABC approach (multiple cost drivers applied to multiple cost pools) justifiable? If so, explain to her why it is. (b) Calculate the costs (of direct material, direct labour, and overhead) for each of the two representa- tive types of soap using direct labour cost as the base for the allocation of overhead. (c) Calculate the costs (of direct material, direct labour, and overhead) for each of the two representa- tive types of soap using an ABC approach for the allocation of manufacturing costs. (d) Do the cost allocation calculations provide support for an ABC approach? Explain. (e) Would you advise Ingrid Krause to continue with her traditional costing approach or change to an ABC approach? Explain. EXHIBIT 1 - COSTS FOR ONE MONTH'S PRODUCTION OF SOAP Costs per 100 g Soap Cost Components Total Industrial Soap (Hospital) Luxury Soap (Hotel) Direct materials $4,000,000 $0.40 $0.80 Packaging $2,000,000 $0.10 $0.60 Direct labour $ 750,000 $0.14 $0.15 Manufacturing $5,000,000 Processing $2,500,000 Finishing $1,500,000 Packaging $1,000,000 EXHIBIT 2 - TIME REQUIRED FOR ONE MONTH'S PRODUCTION OF SOAP Time Components Total Time per 100 g Soap Industrial Soap (Hospital) Luxury Soap (Hotel) Processing 750,000 seconds 0.2 second 0.4 second Finishing 300,000 seconds 0.03 second 0.4 second Packaging 100,000 seconds 0.006 second 0.5 second