Gorilla Corporation manufactures two products, Product S and Product L. Product L is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product S. Product L is the more complex of the two products, requiring two hours of direct labour time per unit to manufacture, compared to one hour of direct labour time for Product S. Product L is produced on an automated production line. Overhead is currently assigned to the products on the basis of direct labour hours. The company estimated it would incur $459,100 in manufacturing overhead costs and produce 8,000 units of Product L and 35,000 units of Product S during the current year. Unit costs for materials and direct labour are: Product s Product L $13 $29 Direct materials Direct labour $15 $30 Required: a) Compute the predetermined overhead rate under the current method of allocation, and determine the unit product cost of each product for the current year. b) The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below: Total 1,900 Activity Cost Pool Machine setups required Purchase orders issued Machine hours required Maintenance requests issued Total 750 Estimated Overhead Cost $190,000 39,382 91,750 137,968 $459,100 Expected Activity Products Product L 650 1,250 550 200 6,100 9,000 670 930 15,100 1,600 Using the data above and an activity-based costing approach, calculate the pool rates and determine the unit product cost of each product for the current year. c) Explain how ABC improves product cost information, why would they chose to move to an ABC system