I have a case study, there are 2 sections with 8 questions in total.

But I ONLY need the answers to part (c) for each section.

Please check the attachment for the questions. Thanks a lot.

Case Study Case Study Presentation (10%) Problem: Macquarie Electronics manufactures small engines for both household and commercial use. The business produces three models called Standard, Advanced and Premium, and applies overhead on the basis of direct labour hours. Product costs and annual sales data are as follows: Annual sales Product Costs: Raw material Direct labour Manufacturing overhead Standard 24 000 Advanced 1 000 Premium 12 000 $ 15 $ 30 $ 50 30 (1hr@$30) 150 30 (1hr@$30) 150 $210 $230 15 (0.5@$30) 75 Total product cost $105 Calculation of predetermined overhead rate: Manufacturing overhead budget: $ Maintenance machinery Depreciation machinery Deprecation and Insurance, factory Inspection Purchasing and shipping Material handling Engineering Miscellaneous manufacturing overhead costs Total budgeted manufacturing overhead Predetermined overhead rate: Total Direct labour budget Standard model Advanced model Premium model Total 360 000 1 240 000 360 000 455 000 330 000 500 000 275 000 230 000 3 750 000 Budgeted manufacturing overhead Budgeted direct labour hours = $150 per hour 12 000 1 000 12 000 25 000 hrs For the past 20 years, Macquarie Electronics' pricing policy has been to set a target price for each product equal to 120 percent of the full product cost. However, the business has come under increasing price pressure from other competitors. The CEO of Macquarie Electronics, Barry Martin, was concerned about the business performance and had a chat with the CFO, Annette Clark in the tea room. Barry Martin: Annette, why can't we compete with these other companies? They are selling their standard models for only $105 and their Premium models for $250. Are we really that inefficient? Annette Clark: As I raised this in our last executive meeting, it is due to an outdated costing system. It was apparent that our current system is distorting product costs. I will compile some data to show you what I mean. 4 Case Study Case Study Presentation (10%) Annette gathered the basic information needed to implement an activity-based costing system in the following table. The percentages are the proportion of each activity driver consumed by each product line. Activity pool Depreciation, machinery Maintenance machinery Engineering Inspection Purchasing and shipping Material handling Depreciation and Insurance for factory Miscellaneous manufacturing overhead costs Activity driver Standard Product line Advanced Premium Machine hours 42% 15% 43% Engineering hours 45% 10% 45% Number of material orders 46% 8% 46% Factory space usage 40% 18% 42% Before Annette could report back to Barry. She received a phone call from her friend, Steve Brown, the production manager for the advanced-engine. Steve was upset and he let Annette know it. Steve Brown: Annette, I've gotten wind of your new product cost analysis. There's no way the advanced model costs anywhere near what your numbers say. For years and years, this line has been highly profitable and it's reported product cost was low. Now you're telling me it costs more than twice what we thought. I just don't believe it. Annette Clark: Steve, the advanced engine is really losing money. Steve Brown: My friend, if you report these figures to Barry. He will discontinue the Advanced line. My job is on the line. Annette, is it possible to massage those numbers a little bit? No one will notice... Required: 1. Using the information provided by Annette a) Calculate the product costs using Activity-Based Costing (ABC). b) Discuss the differences in the product costs and projected selling prices under the traditional and activity-based costing approaches. c) What is the impact of using the traditional costing approach on the competition of Macquarie Electronics products? d) Make recommendations for the pricing of the three models. 2. Discuss the ethical issues involved a) Who are the stakeholders? b) Is the production manager, Steve, acting ethically? Which of the principles set out in the Code of Ethics for Professional Accountants have been violated? c) What are Annette's ethical obligations? d) What should Annette do? Critically evaluate each course of action. 5