I need help with question 1. this is a homework assignment. can you fill in the numbers with the work.

Zealand Case ACRU 2223 Fall 2019 orporation that produces different types of The Zealand Company is a publicly traded corporation that produces different commercial food processors. My name is Alan Smith and I have worked for this compa the last ten years in the controller's office. I was both an accounting and finance major late any new university. The company currently produces 300 products and does not anticipate any that products coming out over the next three years I have previously mentioned to my supon is not appropriate for our firm to use a traditional accounting system (where overna allocated across products at a rate of 400% of direct labor costs) when different products to different amounts of indirect overhead resources. For example, under the traditional system costs associated with testing of products for quality assurance purposes are part of overne and therefore allocated across products based on direct labor costs. Yet, some of our products require as much as 5 hours of testing whereas some products require less than 1 minute of testing with no connection to direct labor costs. Given that traditional costing systems result in significant cost distortions when determining products costs and given that the firm now has revenues of over $100 million a year, Zealand has decided to dopt activity based costing over the next year or two. Zealand's management has hired Deloitte Consulting to help us implement activity based costing. I will be acting as the liaison between our firm and Deloitte. As part of the initial implementation phase, I have asked Deloitte to derive the costs and product margins associated with two of our products, smart and pline, so that these costs and product margins could be compared with the costs and product margins under our current traditional accounting system. 1 picked these products since Zealand management believe they have very different demands on indirect overhead resources. Further, smatt is sold in large quantities whereas pline is sold in small quantities and traditional accounting systems can cause large cost distortions in different directions for products sold in large and small quantities. Current information from our existing system on a per unit basis is shown in Exhibit 1. Exhibit 1 pline $32 smatt $32 0.3 $30 $80.00 Direct material Direct labor hours Direct labor cost per hour Sales price per unit 0.3 $30 $100.00 My staff has identified for Deloitte five cost pools. Information on those cost pools and the related allocation bases are provided in Exhibit 2. Exhibit 2 Total Costs Equipment setups Allocation Base $13.200.000 Purchase orders Number of setups 60.000 Machining number of purchase orders 220.000 $69,600,000 number of machine hours Testing 1.200.000 $16,000,000 number of testing hours 800,000 Packaging $24,000,000 number of containers 2,000,000 Although fixed costs are lumped in with variable costs across the five different cost pools, I am aware that machining related costs consists almost exclusively of depreciation costs. Hence with respect to all questions asked in this case, machining costs will be treated as entirely fixed with respect to machine hours. Each machine is used in the production of multiple product lines. The resale value of machines is only affected by the passage of time and not by how much they are used in a given year. In all questions asked in this case, the firm will assume that costs associated with equipment setups, purchase orders, testing, and packaging & shipping are variable with respect to their respective activity measures. Currently, we believe our assumptions on cost behavior patterns are quite reasonable. All products are produced in batches, where the size of a batch differs across products. For example, if we produce 80 units of a product in batch sizes of 40, then the product will be produced in two batches. An equipment setup must be performed before producing each batch of a product. Hence, in the example above, two equipment setups would be performed. Units of product are packaged in containers and sent to distributors Production volumes are set equal to sales volumes since the company only produces products that they have orders for. Consequently, the firm never has a beginning or ending work in process inventory, and it does not have a beginning or ending finished goods inventory. Further information on our two products are provided in Exhibit 3 Exhibit 3 smatt pline annual sales and production in units number of units per batch number of purchase orders number of machine hours per unit total number of testing hours total number of containers 200,000 50 250 0.20 6,000 2,000 40,000 25 200 0.90 4,000 1,000 and an income statement for pline using 1. (20 Points) Prepare an income statement for small and an income state rate of 4007 the traditional accounting system where overhead is applica direct labor costs. The income statements should be prepared on ine template for guidance: average net operating income per unit using the follo ents should be prepared on a total basis and then show the smatt pline $$$ SSS SSS SSS SSS Sss SSS Sales Direct materials Direct labor Manufacturing overhead Total Costs Net operating income Average net operating income per unit SSS SSS $$$ SSS SSS 2. (20 Points) Calculate the five activity rates (predetermined overhead rates) under activity based costing 3. (35 Points) Prepare an income statement for smatt and an income statement for pline using activity based costing. The income statements should be prepared on a total basis and then show the average net operating income per unit using the following template for guidance: smatt SSS SSS $S$ SSS pline $S$ SSS $$$ SSS SSS Sales Direct materials Direct labor Equipment Setups Purchase orders Machining Testing Packaging Total Costs Net operating income Average net operating income per unit SSS 4. (10 Points) Assume next year that the activity rates (predetermined overhead rales) the same as you calculated in question (2) Assume that the demand for is expected to increase significantly. Consequently, the firm expects to produce more batches of smatt next year than this year and the firm plans to produce SZOS O 80 rather than 50. Calculate that the equipment setup COSEP of matt will be next year if it can be calculated. If it cannot be calculated, then explain in words why the equipment setup cost per unit of smart cannot be determined in the absence of more information Excluding your quantitative analysis if any, your explanation should not be more than 1/3 page double spaced with a 12 font size. 5. (15 Points) Question 5 is independent of question 5. Next year, because of an expected increase in product demand, machine hours are expected to increase from 1,200,000 to 1,500,000. The company will not need any new machinery since the current machinery is highly underutilized. Also, the number of testing hours will increase from 800,000 to 1,000,000. Assume that these new levels of operations are within the firm's relevant range. Calculate what the activity rate for the cost pool of machining would be next year if it can be calculated. Also, calculate what the activity rate for the cost pool of testing would be next year if it can be calculated. If one or both rates cannot be calculated, then explain in words why the calculations cannot be determined in the absence of more information. Excluding any quantitative analysis, your explanation should not be more than 1/3 page double spaced with 12 font