Laver Ltd is a manufacturer of tennis racquets. Rod, the sales manager received an order for 3,000 tennis racquets which were immediately manufactured. The order required the following:

Machine set-ups	14 set-ups
Machine hours	6,500 machine hours
Materials weight	8,500 kgs
Number of units	3,000 units
Direct labour hours	5,500 hours

Laver Ltd has the following indirect cost data:

Activity Cost Pool	Cost driver	Cost ($)	Total level of cost driver
Machine Processing	Number of set-ups	48,000	40 set-ups
Electricity	Machine hours	140,000	22,500 hours
Materials Handling	Materials weight	34,000	35,000 kgs
Quality Control	Number of units	58,200	82,000 units
Packaging	Direct labour hours	73,800	14,560 hours
		354,000

Required

Briefly comment on the importance of a costing system to Laver Ltd.

Suppose that a single indirect cost rate based on machine hours was used to allocate indirect costs. Calculate the indirect cost rate.

What amount of indirect costs would be applied to the order of 3,000 tennis racquets using the indirect cost rate based on machine hours?

Calculate the indirect cost rate for each cost pool identified using Activity-Based Costing (ABC).

Assign the indirect costs to the order of 3,000 tennis racquets using Activity-Based Costing (ABC).

Briefly comment on any differences in your answer between the two methods.