Problem 8 - 25 minutes, 13 marks (Please show your work and organize/structure your responses appropriately in Excel) Balin is a manufacturer makes and distributes tires for different budgets. Balin categorizes them into three categories: Value, Comfort, Sport. Production is highly automated for the Value model, whereas Comfort and Sport tires require increasing amounts of labour, depending on the specific requirements for each process. Balin applies all indirect costs to production using one predetermined overhead (OH) rate based on direct labour hours (DLH). The estimates production came up with for the year are 27,600 DLH at a rate of $19/hour. Assume that the following activity took place in the first month of the new year Value Comfort Sport Number of units produced 18,400 7,400 2,800 Direct material costs $19,100 $12,000 $7,400 Direct labour hours 500 900 1,800 Number of orders 6 4 3 Number of production runs 2 2 3 Kilograms of material used 7,400 2.900 1,400 Machine hours 1,100 280 180 Number of inspections 3 3 3 Number of units shipped 16,600 6.900 2,300 Balin's financial team is proposing switching to an activity-based costing system and provided the following information: Activities Recommended Cost Estimated OH Drivers Cost Cost Drivers Order processing Number of orders $ 55,000 100 orders Material handling Kilograms of materials 550,000 110,000 kilograms used Machine depreciation and Machine hours 378,000 18,000 hours maintenance Quality control Number of inspections 121,000 40 inspections Required: A. Calculate the production costs for each product in the first month of the upcoming year, using direct labour hours as the allocation base. B. Calculate the production costs for each product in the first month of the upcoming year, using activity-based costing. C. Compare your answers in parts (a) and (b). Is the overhead charged to each product the same under each method, why is this relevant to making production decisions, and which one should be used