Lighting World Inc. is a producer of light fixtures. Currently, the company uses a predetermined plantwide rate based on budgeted direct labour cost to assign manufacturing overhead costs to jobs. For 2021, manufacturing overhead cost is budgeted to be $720,000 and budgeted direct labour cost is $480,000. The company's management accountant has begun to investigate whether the company should adopt an activity-based costing (ABC) system to assign overhead costs and has gather the following budgeted information for 2021. Activity Machining Setups Inspection Total overhead cost Activity Cost Cost Driver $450,000 Machine hours Total 75,000 $144,000 $126,000 Number of production runs Inspection hours 100 1,500 $720,000 The company is intending to bid on a proposed job. Usually, bids are based on full manufacturing costs plus a markup of 40%. Estimates for the proposed job are as follows: Direct materials cost Direct labour cost Machine hours Number of production runs Inspection hours Required $5,400 $2,100 775 2 17 A) Compute the plantwide predetermined overhead rate. B) Using the plantwide predetermined overhead rate, calculate the bid price of the proposed job. C) If the company decides to use ABC, what would be the rates for each activity? D) Using the ABC rates, calculate the bid price of the proposed job. E) Why would a company, such as Lighting World, prefer to use ABC?