please explain and show all work, 1-5

Mammoth w a de been produced bat sells for $123 anagement al Ben 6-36 ABC, implementation, ethics. (CMA adapted) Plum Electronice Corporation, manufactures two large-screen television models: the Mammoth, which has her 2009 and sells for $990, and the Maximum, a newer model introduced in early 2011 that Based on the following income statement for the year ended November 30, 2013, senior man have decided to concentrate Plum's marketing resources on the Maximum model and to begin to Mammoth model because Maximum generates a much bigger operating income per unit Plum Electronics Income Statement for the Fiscal Year Ended November 30 egin to phase "Looking listed. If you ha of setups and hours and insp cost-allocation for these issues Jacobs kr Maximum and used results in headquarters, aware that as adversely affec Total $26,796,000 Revenues Cost of goods sold Gross margin Selling and administrative expense Operating income Units produced and sold Operating income per unit sold Mammoth $21,780,000 13,794,000 7,986,000 6,413,000 $ 1,573,000 22,000 $71.50 Maximum $5,016,000 3,511,200 1,504,800 1,075,800 $ 429.000 17,305.200 9,490.800 7.488.800 $ 2.002,000 4,000 $107.25 Details for cost of goods sold for Mammoth and Maximum are as follows. 1. Using act 2. Explain b models 3. Comment 4. How mig! 5. What sha 6-37 Ac dising. SL operates at ca cost of mercha line. SB is wor Sup Mammoth Maximum Total Per Unit Total Per Unit Direct materials $ 5,033,600 $228.80 $2,569,600 $642.40 Direct manufacturing labor 135,600 19.80 184,800 46.20 Machine costs 3.484,800 158.40 316,800 79 20 Total direct costs S 8,954,000 $407.00 Manufacturing overhead costs $3,071,200 $767.80 $ 4,840,000 $220.00 $ 440,000 Total cost of goods sold $110.00 $13,794,000 $627.00 $3,511,200 $877.80 "Mammoth requires 1.5 hours per unit and Maximum requires 3.5 hours per unit. The direct manufacturing labor cost is $13. 20 per hour Machine costs include se costs of the machine, repairs, and maintenance, Mammoth requires machine-hours per unit and Maimun requires 4 machine-hours per unit. The machine hour rate is $19.80 per hout Manufacturing overhead costs are allocated to products based on machine-hours at the rate of $27.50 per hour. Revenues Cost of mer Cost of cafe Number of Number of Hours of sh Items sold vg in the A had the terSteve Jacobs, is advocating the use of activity-based costing and city-based management hered the following information about the company's manufacturing overhead costs for the year Assigment Material 240 has gathered the aded November 30, 2013 Units of the Collection Base Mammoth Maximum Activity Center (Cost-Allocation Base) Soldering number of solder points Shipments number of shipments) Quality control (number of inspections) Purchase orders (number of orders) Machine power (machine-hours) Machine setups (number of setups) Total manufacturing overhead Total Activity Costs $1.036 200 946.000 1,364,000 1,045,440 63,360 825.000 $5.290.000 1,185,000 16,200 56.200 385.000 3,800 21,300 109.980 16.000 14.000 1,570,000 20.000 77,500 190.080 192 000 80,100 175.000 16.000 30.000 After completing his analysis, Jacobs shows the results to Charles Clark, the Plum division president. Clark does not like what he sees. "If you show headquarters this analysis, they are going to ask us to phase out the Maximum line, which we have just introduced. This whole costing stuff has been a major problem for us. First Mammoth was not profitable and now Maximum." "Looking at the ABC analysis, I see two problems. First, we do many more activities than the ones you have listed. If you had included all activities, maybe your conclusions would be different. Second, you used number of setups and number of inspections as allocation bases. The numbers would be different had you used setup- hours and inspection-hours instead. I know that measurement problems precluded you from using these other cost-allocation bases, but I believe you ought to make some adjustments to our current numbers to compensate for these issues. I know you can do better. We can't afford to phase out either product." Jacobs knows that his numbers are fairly accurate. As a quick check, he calculates the profitability of Maximum and Mammoth using more and different allocation bases. The set of activities and activity rates had used results in numbers that closely approximate those based on more detailed analyses. He is confident that headquarters, knowing that Maximum was introduced only recently, will not ask Plum to phase it out. He is also aware that a sizable portion of Clark's bonus is based on division revenues. Phasing out either product would adversely affect his bonus. Still, he feels some pressure from Clark to do something. 1. Using activity-based costing, calculate the gross margin per unit of the Maximum and Mammoth models. 2. Explain briefly why these numbers differ from the gross margin per unit of the Maximum and Mammoth models calculated using Plum's existing simple costing system. 3. Comment on Clark's concerns about the accuracy and limitations of ABC. 4. How might Plum find the ABC information helpful in managing its business? 5. What should Steve Jacobs do in response to Clark's comments? Required