Management Accounting Quiz-2 Time allowed: 30 minutes Maximum Marks: 13 The Manhattan Company manufactures two models of compact disc players: a deluxe model and a regular model. The company has manufactured the regular model for years; the deluxe model was introduced recently to tap a new segment of the market. Since the introduction of the deluxe model, the company's profits have steadily declined, and management has become increasingly concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly. The current cost accounting system allocates manufacturing support costs to the two products on the basis of direct labour hours. The company has estimated that - this year, it will incur $1 million in manufacturing support costs and will produce 5,000 units of the deluxe model and 40,000 units of the regular model. The deluxe model requires 2 hours of direct labour, and the regular model requires 1 hour. Material and labour costs per unit and selling price per unit are as follows: The company has decided to trace manufacturing support costs to four activities. Following are the amount of manufacturing support costs traceable to the four activities this year: Q.1. Compute the manufacturing overhead absorption rate for this year based on current cost accounting system. (1) Q.2. Determine the cost to manufacture one unit of regular and deluxe models as per current accounting system. (2) Q. 3 What are the profit margins on regular and deluxe models as per current accounting system? (2) Q.4. Determine the cost to manufacture one unit of regular and deluxe models as per activitybased costing system. (6) Q. 5 What are the profit margins on regular and deluxe models as per activity-based costing system? (2)