Hoffman Ltd makes only two types of portable cooking stove, the Lightweight (LW)and the Megarange (MR). Last year it produced 4,500 LWs and 500 MRs. The direct

materials cost 3.00 for one LW and 10.00 for one MR. The assembly workers whoput the stoves together are all paid at the same rate of 6.30 an hour. When LWs are

being produced each operative assembles nine stoves an hour and when MRs arebeing produced each operative assembles seven stoves an hour. This is the only

labour that Hoffman classes as 'direct labour'. The factory uses automatedmachinery to manufacture the components which are common to both stoves. The

other components are bought in. Each stove uses 15 machine hours in itsconstruction.For some time now, the company has been considering the introduction of activitybased costing. It has decided to recost last year's production using this method so itcan compare costs with those under its current absorption costing system. Thecurrent overhead absorption rate is based on the number of machine hours. Lastyear's production activities have been analysed as follows:Activity Cost driver Activity cost pool ()Purchasing Purchase order 20,000Training Training hour 1,000Setting up machines No. of set-ups 2,250Running machines Machine hours 14,250Total 37,500The analysis also quantified the number of cost drivers caused by each stove:ActivityNo. of cost drivercaused by LWsNo. of costdrivers causedby MRsPurchasing 360 40Training 20 30Setting up machines 60 30Running machines 67,500 7,500

Questions:1. Calculate the absorption cost for each type of stove. (1 points)2. Calculate the activity-based cost for each type of stove. (1 points)3Comment on your findings. (2 point

Could you help me with this question. Thank you very much.