Kendle and Watson, a CPA firm, has provided audit, tax and management advisory services to business in the London area for over 50 years. Recently, the firm decided to use ABM and activity based costing to assign its overhead costs to those service functions. Bellamy Kendle is interested in seeing how the traditional and the activity-based costing approaches affect the average cost per audit job. The following information has been provided to assist in the comparison: Total direct labour costs $400,000 Other direct costs $120,000 Total direct costs $520,000 The traditional costing approach assigned overhead costs at a rate of 120% of direct labour costs. Data for activity-based costing of the audit function are as follows Activity Cost driver Activity cost rate Activity usage Professional development Number of employees $2,000 per employee 50 employees Administration Number of jobs $1,000 per job 50 jobs Client development Number of new clients $5,000 per new client 29 new clients Required: ( Using direct labour cost as the cost driver, calculate the total costs for the audit function. What is the average cost per job? (ii) Using activity-based costing to assign overhead, calculate the total costs for the audit function. What is the average cost per job? (iii) Calculate the difference in total costs between the two approaches. Why would activity based costing be the better approach to assigning overhead to the audit function