PROBLEM 2 (Activity Based Costing & Incremental Analysis) Part A 25 MARKS 15 Marks In another of its divisions, Milles Fleurs Inc. has recently completed an exercise to utilize yet another costing system, Activity Based Costing, as the new Cost Accountant has advised of the numerous benefits of utilizing ABC. The division incurs $701,000 of overhead costs each year in its three main activity cost pools, machining, inspections and packing. The machining department works 4,000 hours per year, there are 600 inspections per year, and the packing department packs 1,000 orders per year. Details are as follows: Activity Overhead Costs Total Machining $400,000 Cost Driver Machining Hours Product X Product Y Driver Inspections $201,000 # of Inspections 1,000 100 3,000 4,000 500 600 Packing $100,000 Orders Packed 350 650 1,000 Required: a. Compute the overhead rate for each Activity. b. Assign the Overhead cost to each product. c. The following have been provided for Product X: Direct Materials Direct Labour No. of Units produced $225,000 $325,000 15,000 Compute the total cost per unit of product X. (6 Marks) (6 Marks) (3 Marks)