Epic Ltd manufactures two different models of its famous video rame console: the Activer and Virtual models. The company has been producing the Active model for 10 years, whereas the Virtual model was introduced this year to appeal to a wide variety of consumers and capture a larger segment of the video game market. Once the Virtual product line was introduced, profits declined rapidly. Management has become concerned about the accuracy of their costing system as sales of the Virtual system haver been increasing rapidly since being released, Epic currently allocates manufacturing overhead using direct labor hours as the cost driver. The company has estimated it will incur 53,000,000 in manufacturing overhead costs and produce 80,000 units of the Active model and 9,500 units of the Virtual model. The following information pertains to the production of the Activer and Virtual models: Direct Labour Hours per unit Direct materials per unit Direct Labour per unit Selling Price Active 2.5 $32 $45 $130 Virtual 3.5 $60 $72 $330 10 Required 11 A) Calculate the cost to produce one unit of the Active and Virtual models using the current method of allocating manufacturing overhead (traditional costing). (3 marks) 12 B) The company has decided it wants to switch to Activity-Based Costing, and has identified the following four activities relevant to producing both the Activer and Virtual lines. The relevant amounts 13 for 2022 are: 14 Total units 15 Activity Cost Driver Cost of driver ActiveR Virtual Shipping 16 Number of shipments $ 600,000 950 450 500 17 Quality Control Number of Inspections $ 750,000 3,500 1,500 2,000 Machine Setups Number of setups $ 900,000 550,000 300,000 250,000 19 Machine Maintenance Machine hours $ 750,000 600,000 400,000 200.000 20 $ 3,000,000 21 Using the activity based costing data above, compute the total cost to manufacture one unit of each model (6 marks) 22 23 ) Briefly explain the difference between how overhead is treated between ABC and traditional costing, and this difference's overall impact on costing the Virtual model? (1 mark) 24 Problem 1 Problem 2 Problem ) Problem 4 Problems Ready 16 9 E