M$$caPart inc. manufactures two types of precision mechanical parts: the A$100$ model and the B$200$ model. The company wishes to analyze the profitability of these two products using both the traditional full$-$cost method and the CPA method for the year $20$X$2.$

$1.$ Basic data :

MecaPart inc. manufactured and sold $40,000$ units of the A$100$ model at $$45$ each and $25000$ units of the B$200$ model at $$50$ each.

Indirect production costs are currently allocated between products on the basis of labour hours based on direct labor hours.

Total selling and administrative expenses: $$650,000.$

Breakdown of production costs using the traditional approach AND Activity$-$

based costing $($ABC$)$: Work to be done:

$1.$ Prepare the income statement for MecaPart Inc. for the year $20$X$2$ using the traditional full$-$cost method.

$2.$ Calculate the margin on production costs for model A$100$ and model B$200$ using both approaches $($traditional and CPA$).$

$3.$ Based on your calculations, explain why these two methods differ from each other, and make recommendations for the company.