MNO Ltd produces two types of scooters-Model X and Model Y. Each product needs to contain a special part that is difficult to handle (one for X type and four for Y type). Both of these products are produced in batches (Type X is for large batches, and Type Y is for small batches). Every new batch need to "set up" the production facility. The details of these two products are: 50 Model X Model Y Annual production and sales (units) 12,000 12,000 Unit selling price (RM) 120 170 Hourly direct labor rate (RM) 16 18 Direct material cost per unit (RM) 44 64 Direct labor time per unit (hours) 2 2.5 Batch size (units) 1000 SO Number of set-ups per batch 1 2 Number of special parts per unit 1 4 Number of separate material issues from stores per batch 1 1 Number of sales invoices issued each year 250 In recent months, MNO Ltd has been trying to persuade customers who buy the Model X to purchase the Model Y instead. An analysis of overhead costs for MNO Ltd has provided the following information Overhead cost RM Cost driver Set-up cost 49,200 Number of set-ups Special parts handling cost 62,400 Number of special parts Customer invoice cost 14,400 Number of invoices Material handling cost 63,000 Number of batches Other overheads costs 108,000 Labor hours Required: a) Calculate the unit gross profit and gross margin of Model X and Model Y scooters using i) the traditional direct-labor-hour based absorption of overheads: (10 marks) ii) activity-based costing methods. (20 marks) b) Comment on the managerial implications for MNO Ltd of the results in (a) above. (4 marks)