My questions

1. Calculate new (ABC) product costs for the three products, based on the new data collected by the financial controller. Round to the nearest cent
2. make a memo to the CEO explaining what has been happening as a result of using the firm's traditional product costing system.
3. What strategic options does Pride Electric Motor Corporation have? What do you recommend and why?
4. 

Task details: Pride Electric Motor Corporation manufactures electric motors for commercial use. The company produces three models called standard, deluxe and heavy-duty. The company uses a job costing system with manufacturing overhead applied on the basis of direct labour hours. The system has been in place with little change for 25 years. Product costs and annual sales data are as follows: Standard mode! Deluxe model Heavy-duty rnodel Annual sales (units) 200(1) 1000 10000 Product costs: Raw material 5 10 S 25 S 42 Direct labour 10 (0.5 hr @ $20) 20(1 hr @ $20) 20(l hr @ $20) Manufacturing overhead budget: Depreciation. machinery $1 4800(1) Maintenance. machinery \"00(1) Depreciation. taxes and insurance for factory 300000 Engineering 3500(1) Purchasing. receiving and shipping 250000 Inspection and repair of defects 375000 Material handling 400000 Miscellaneous manufacturing overhead costs 295 0(1) Total $3 5700\") Direct labour budget: Standard model 10000 hrs Deluxe model I 000 hrs Heavy-duty model 10000 hrs Total 21 000 hrs For the past 10 years, the company's pricing formula has been to set each product's budgeted price at 110 per cent of its full product cost. Recently, however, the standard model motor has come under increasing price pressure from offshore competitors. As a result the price on the standard model has been lowered to $110. ACC200 K >KOI King's Own Institute The company CEO recently asked the financial controller, 'Why can't we compete with these other companies? They're selling motors just like our standard model for $106. That's only a dollar more than our production cost. Are we really that inefficient?' The financial controller responded by saying, 'I think this is due to an outmoded product costing system. As you may remember, I raised a red flag about our system when I came on board last year. But the decision was to keep our current system in place. In my opinion, our product costing system is distorting our product costs. Let me run a few numbers to demonstrate what I mean'. Getting the CEO's go-ahead, the financial controller compiled the basic data needed to implement an activitybased costing system. The ABC applied overhead data are displayed in the following table. Activity Standard Deluxe Heavy Model Model Duty Model Depreciation and Maintenance, Machinery $32.00 $208.00 $75.20 Engineering, Inspection, and repair of defects 17.04 43.50 34.08 Purchasing, Receiving, shipping and Material 15.28 52.00 29.25 handling Depreciation, taxes and insurance for factory 12.5 89.25 25.59 and Miscellaneous manufacturing overhead