Gadgets (Pty) Ltd makes two types of tablets Top-notch and Standard. The Top-notch is personalised and has higher quality hardware. The Standard is generic and has standard hardware. The tablets are manufactured in a two-stage production process, firstly Stage X, followed by Stage Y. Gadgets (Pty) Ltd currently uses a departmental overhead recovery rate based on machine hours for each production cost centre. Factory overheads are allocated to the products as the product moves through each production cost centre. A 50% markup is applied to the product cost to arrive at the final selling price. The market for tablets has become very competitive, with price-cutting tactics commonplace in the industry. Senior management recently appointed a team of external management consultants to review the entitys operations and one of the consultants recommendations was that Gadgets (Pty) Ltd implement an activity-based costing (ABC) system. The consultants report concluded stating that: The benefits of ABC are enormous. One of its key benefits is that it results in accurate product costing and from there, accurate profit measurement of products. The financial director has asked you to review the consultants recommendations and undertake a comparative analysis between the existing costing method and the proposed costing method using the September 2023 figures to illustrate your analysis. Key data for September 2023 were as follows: 1. 60 000 Standard and 20 000 Top-notch tablets were produced and delivered to customers. 2. The Standard and Top-notch tablets are manufactured in production runs of 1 000 units and 500 units respectively. Actual machine hour utilisation per production run during September 2023 was: Standards Stage X run of 1 000 units: Time taken = 10 machine hours Stage Y run of 1 000 units: Time taken = 20 machine hours Top-notch Stage X run of 500 units: Time taken = 15 machine hours Stage Y run of 500 units: Time taken = 25 machine hours Production overhead costs allocated and apportioned to each production cost centre during September 2023 were: Stage X Stage Y Total R195 000 R205 000 R400 000 Direct costs incurred during September 2023 were: Standard Per 1 000 Tablets Top-notch per 500 Tablets Materials R10 000 R20 000 Labour R2 000 R500 The management consultants have recommended that Gadgets (Pty) Ltd establish the following four cost pools: Activity Cost driver Purchasing Number of purchase orders Production Number of machine set-ups Maintenance Machine hours (X and Y combined) Despatch Number of deliveries The X and Y production cost centres would in this way be combined into one cost pool. You establish that the activity levels for the respective products and the total overhead allocation for each cost pool during September 2023 would have been as follows: Activity Standard Per 1 000 Tablets Top-notch per 500 Tablets Total Overheads Purchasing 10 30 R75 000 Production 2 5 R200 000 Maintenance 30 40 R95 000 Despatch 5 10 R30 000 Total R400 000 REQUIRED: 2.1. Calculate the selling price per unit for each tablet using the existing method. (12 marks) 2.2. Calculate the selling price per unit for each tablet using the proposed ABC method. You may assume that the 50% markup still applies. (14 marks) 2.3. State whether or not Gadgets (Pty) Ltd should implement the ABC system. Provide reasons to support the answer. (3 marks) Round to two decimals where applicable