E-Step Corp manufactures keyboards for laptop and desktop computers and operates at capacity. They currently assign all costs using a simple costing method using a single indirect cost rate, total manufacturing machine hours. Laptop Desktop Annual production 30,000 50,000 Direct Materials Cost $135,000 $120,000 $84,000 $140,000 Direct manufacturing labour costs Budgeted indirect cost pool $282,000 Budgeted total machine hours 60,000 Actual machine hours 20,000 30,000 E-Step decides to refine their costing approach and adopts an activities-based costing system. They first determine that there is an additional direct cost, direct painting costs. For laptops this cost is $7,000 and for desktops is $3,000. They also identify the following three activities: machining costs, setup costs & inspection costs. Total budgeted indirect costs are as follows for three cost pools are: Total Machining Costs $100,000 Setup costs $120,000 Inspection costs $50,000 M&L decides to allocate machining costs on machine hours, setup costs on production runs & inspection costs on inspection hours. M&L determines the below three budgeted quantities of the cost allocation bases Laptop Desktop Machine-hours 25,000 41,500 Number of production runs 30 70 Inspection hours 1,100 500 Part 1: Calculate the total cost & unit cost to produce both the laptop and desktop under a job costing system (5 marks) Part 2 -Calculate the budgeted indirect cost rate for the three cost pools under the new costing system (5 marks) Part 3 - Calculate the manufacturing overhead cost for each product using the three cost pools (5 marks) Part 4 - Calculate the manufacturing cost for each product both total cost and unit cost under the new costing system (5 marks) Part 5 - How might E-Step Corp use the new cost system to better manage its business