Nasir is planning to use the activity-based costing (ABC) to determine if it would show a different cost structure for the two products. The three major indirect costs for manufacturing the products are purchase orders, power usage and setup costs and handing materials. A decision was made to separate the manufacturing department costs into three activity centers 1) Inspection using number of purchase orders as the cost driver. 2) Fabricating using machine hours as the cost driver and 3) Assembly using number of setups as the cost driver. The annual budget before separation of manufacturing overhead is shown below in the table: Number of units Direct labor Total Cost Class 25,000 Product line Crystal 15,000 3 hours/unit 4 hours/unit Number of direct labor hours 120,000 hours Total Direct Labor AED 600,000 Direct Material AED6/unit AED 8/unit Manufacturing Overhead AED 720,000 1- Inspection department (1 mark) 2- Fabricating department (mark) 3- Assembly department (mark) C. Using ABC system, calculate the cost per unit for 1- Crystal (2.5 marks) 2- Glass (2.5 marks) D. Discuss how a decision by Nasir Manufacturing regarding the continued production of Crystal will be affected by the results of your calculations in requirement C (2 marks) E. If Nasir decides to moves to mass production and focuses on one product (Glass) by using process costing system in highly automated process. Identify the five steps required of the production the cost report if Nasir uses weighted average method. (2 marks) The cost structure after separation of overhead into activity pools is shown below Direct Labor Direct Material Manufacturing overhead Inspection Fabricating Assembly 30% 40% 30% 35% 35% 30% 20% 50% 30% The activity base rates for the products are shown below: Activity Base Number of Purchase Orders Machine hours per unit Number of setups Questions: Crystal Glass 8.000 12,000 10 4.000 30 12.000 A. By allocating the manufacturing overhead based on direct labor hours, calculate the 1. Total manufacturing budgeted cost of the manufacturing department (2 marks) 2- Cost per unit for Crystal product (3 marks) 3- Cost per unit for Class product (3 marks) B. After separation of manufacturing overhead into activity pools, compute the total manufacturing budgeted cost of the