Joe has just got his accounting degree and started working for Lady G Bakery Inc., a small business that is locally known for their delicious banana pudding cups. The business was hit hard by the pandemic, so Lady G closed most locations in 2020 . Instead, they focus on delivering wholesale orders of fresh banana pudding cups locally and frozen banana pudding cups across the country. Now their frozen segment has grown quickly and generated around two thirds of the revenues they reported last year. Joe is a management trainee in the CFO's office, and one of his job responsibilities is to aggregate cost information for their products. He has noticed that the company has been using the traditional costing system for years: all manufacturing overhead costs are allocated across products using a plant-wide predetermined overhead rate of $20 per direct labor hour. Joe is very concerned about this practice, and he has mentioned to his superior that it is not appropriate for the company to use the traditional costing system, because different products require different amounts of indirect overhead resources. For example, under the traditional system all costs associated with accommodating local customers' special requests (such as using organic ingredients and requesting low sugar and low fat options) for fresh banana pudding cups are part of manufacturing overhead costs, and therefore allocated across products based on direct labor hours. However, frozen banana pudding cups are prepared from the preset recipe, so there are no customers' special requests to handle. Given that traditional costing systems may result in significant cost distortions when determining products costs, Joe's supervisor asked him to explore the potential for implementing activity-based costing. Joe started with the company's 2022 traditional income statement. In 2022, the company only had two products: fresh banana pudding cups and frozen banana pudding cups. He would like to compare the two products' product margins under the activity-based costing system with their gross margins under our current traditional costing system. Joe has identified five activity cost pools and decided the distribution of overhead costs (manufacturing, selling, and administrative) across the four pools below: Information on the costs associated with the five activity cost pools can be found in the traditional income statement on the previous page. Product-specific data: Data from the activitv-based costing svstem: Joe considers "accommodating customers" as a product-level activity, because the cost associated with customer accommodations only incurs when customers order fresh banana pudding cups, as mentioned before. "Customer relations" is a customer-level activity, and customers can order either fresh or frozen banana pudding cups or both. Therefore, there is only a total number of customers. Production volumes are set equal to sales volumes since the company only makes banana pudding cups that they have orders for. Consequently, the company never has a beginning or ending work in process inventory, and it does not have a beginning or ending finished goods inventory either. 5. (15 Points) Calculate product margin for the two products, fresh banana pudding cups and frozen banana pudding cups, using the activity-based costing system. The amount of product margin should be on a total basis and on a per-unit basis using the following template for guidance: 6. (20 Points) Joe and his supervisor will do a presentation in their meeting with the CFO, explaining (1) the major differences between the activity-based costing system and the traditional costing system; (2) the reason why the unit cost for fresh banana pudding cups differs so much under the traditional costing system versus under the activity-based costing system. Could you help them prepare some PowerPoint slides (no more than five) for the presentation? They hope that they can convince the CFO that the company should switch to the activity-based costing system for internal purposes. Joe has just got his accounting degree and started working for Lady G Bakery Inc., a small business that is locally known for their delicious banana pudding cups. The business was hit hard by the pandemic, so Lady G closed most locations in 2020 . Instead, they focus on delivering wholesale orders of fresh banana pudding cups locally and frozen banana pudding cups across the country. Now their frozen segment has grown quickly and generated around two thirds of the revenues they reported last year. Joe is a management trainee in the CFO's office, and one of his job responsibilities is to aggregate cost information for their products. He has noticed that the company has been using the traditional costing system for years: all manufacturing overhead costs are allocated across products using a plant-wide predetermined overhead rate of $20 per direct labor hour. Joe is very concerned about this practice, and he has mentioned to his superior that it is not appropriate for the company to use the traditional costing system, because different products require different amounts of indirect overhead resources. For example, under the traditional system all costs associated with accommodating local customers' special requests (such as using organic ingredients and requesting low sugar and low fat options) for fresh banana pudding cups are part of manufacturing overhead costs, and therefore allocated across products based on direct labor hours. However, frozen banana pudding cups are prepared from the preset recipe, so there are no customers' special requests to handle. Given that traditional costing systems may result in significant cost distortions when determining products costs, Joe's supervisor asked him to explore the potential for implementing activity-based costing. Joe started with the company's 2022 traditional income statement. In 2022, the company only had two products: fresh banana pudding cups and frozen banana pudding cups. He would like to compare the two products' product margins under the activity-based costing system with their gross margins under our current traditional costing system. Joe has identified five activity cost pools and decided the distribution of overhead costs (manufacturing, selling, and administrative) across the four pools below: Information on the costs associated with the five activity cost pools can be found in the traditional income statement on the previous page. Product-specific data: Data from the activitv-based costing svstem: Joe considers "accommodating customers" as a product-level activity, because the cost associated with customer accommodations only incurs when customers order fresh banana pudding cups, as mentioned before. "Customer relations" is a customer-level activity, and customers can order either fresh or frozen banana pudding cups or both. Therefore, there is only a total number of customers. Production volumes are set equal to sales volumes since the company only makes banana pudding cups that they have orders for. Consequently, the company never has a beginning or ending work in process inventory, and it does not have a beginning or ending finished goods inventory either. 5. (15 Points) Calculate product margin for the two products, fresh banana pudding cups and frozen banana pudding cups, using the activity-based costing system. The amount of product margin should be on a total basis and on a per-unit basis using the following template for guidance: 6. (20 Points) Joe and his supervisor will do a presentation in their meeting with the CFO, explaining (1) the major differences between the activity-based costing system and the traditional costing system; (2) the reason why the unit cost for fresh banana pudding cups differs so much under the traditional costing system versus under the activity-based costing system. Could you help them prepare some PowerPoint slides (no more than five) for the presentation? They hope that they can convince the CFO that the company should switch to the activity-based costing system for internal purposes