Problem 1 (Supplemental Problem #1)-Activity-based costing versus traditional costing You have been hired by Casson Manufacturing to assess and make recommendations for the proftability of its Bobblehead lne of products. Casson Manufacturing makes two types of Pistol Pete Bobbleheads. The Huge Bobblehead is 15 feet tall and is sold as a lawn ornament. The Tiny Bobblehead is 15 centimeters tall and is sold as a jewelry apparel item. Although Pistol Pete has been manufacturing the Huge Bobbehead for years, it only recently added the Tiny Bobblehead product lne. The Tiny Bobblehead is more difficult to manufacture and requires special tooling and machine setups because it is made out of pure platinum. Casson Manufacturing has faced intense competition for both products from competing manufacturers and its sales of the Tiny Bobbleheads have recently dropped dramatically. Much of the competition is from Norman, Oklahoma-based Sooner-Goober Manufacturing and the Casson plant manager is convinced that this producer is intentionally selling the Tiny Bobblehead below its manufacturing cost. Huge Bobblehead 100,000 units $500 TinyBobblehead 900,000 units Production Selng price Overhead per unit* Direct materials cost per unit Direct labor cost per unit Direct labor hours Number of production runs Machine hours Receiving orders Engineering hours Materials moves $3 $5 350,000 DLHs 190 runs 85,000 machine hours 450 orders 90,000 hours 60 moves $100 $150 150,000 DLHs runs 15,000 machine hours 40 orders 10,000 hours 40 moves * Cakculated using a plantwide rate based on direct labor hours. This is the current way of assigning the plant's overhead to its products Overhead Costs Setup costs Machine costs Receiving costs Engineering costs Materials handling costsS 500,000 Total overhead costs $ 250,000 $1,250,000 $2,000,000 $1,000,000 $ 5,000,000 Your recommendation is to consid (ABC). Setup costs would be assigned using Number of production runs. Machine costs would be assigned using Machine hours. Receiving costs would be assigned using Receiving orders. Engineering costs would be assigned using Engineering hours. Materials handling costs would be assigned using Materials moves er assigning overhead costs to each product line using Activity-based Costing Problem 1is continued on the next page