Oak Signs makes customized wooden signs for businesses and residences. These signs are made of wood, which the owner glues and carves by hand or with power tools. After carving the signs, she paints them or applies a natural nish. She has a good sense of her labor and materials cost behavior, but she is concerned that she does not have good measures of other support costs. Currently, she predicts support costs to be 55% of the cost of materials. Close investigation of the business reveals that $60 times the number of power tool operations is a more plausible and reliable support cost relationship. Consider estimated support costs of the following two signs that 0 . . g (Click the icon to view the estimated support costs.) Requirements Data table 1. Prepare a report showing the support costs of both signs using eac 2. What advice would you give Oak Signs about predicting support co Sign A Sign B Materials cost $ 800 $ 100 Support Costs Allocated Number of power tool operations 5 9 Cost driver Sign A Sign B M Percent of material costs $ 440 $ 55 $ 300 $ 540 Number of power tool operations Difference $ 140 $ (485) Requirement 2. What advice would you give Oak Signs about predicti If the activity analysis is reliable, by using the current method, Oak Signs is predicting too much cost for Sign A which uses fewer power tool operations and is predicting too little cost for Sign B that use more power tool operations. Based on this, the owner of Oak Signs is overpricing (and could be losing) all of its jobs underpricing (and could be losing money on) all of its jobs. Either way, her sign business could be more protable if she better understood and used activity analysis to allocate support costs. and is Cost driver Sign A Sign B Percent of material costs EA 440 $ 55 Number of power tool operations Difference $ bidding the right amount on jobs that require few power tool operations Requirement 2. What advice would you g If the activity analysis is reliable, by using overpricing (and could be losing) all of its jobs fewer power tool operation er tool operations. overpricing (and could be losing) the jobs that require few power tool operations Based on this, the owner of Oak Signs is overpricing (and could be losing) all of its jobs and is underpricing (and could be losing money on) all of its jobs. Either way, her sign business could be more profitable if she better understood and used activity analysis to allocate support costs.<:> Support Costs Allocated Cost driver Sign A Sign B Percent of material costs $ 440 $ 55 $ 300 $ 540 Number of power tool operations properly pricing the jobs that require many power tool operations. I cost for Sign A which uses underpricing (and could be losing money on) all of its jobs. more power underpricing (and could be losing money on) the jobs that require many power tool operations. underpricing (and could be losing money on) all of its jobs. could be more protable if she better understood and used activity analysis to allocate support costs. and is Either way, her sign business