Q5: SAAR Inc. manufactures special equipment. The selling price per equipment is $1200, and manufacturing cost of $690 per unit: The company accountant has identified the following three activities and related cost drivers for indirect production costs Activity Customer related act. Sales related act. Cost $76,520 27,920 Cost driver No. of services requests No. of sales order Advertising act. 415,320 No. of ads. The company wishes to allocate these costs to its three major customers, KFH, HSB Co., and BBK. Activity-base usage and unit volume information for the three customers is as follows: KFH HSB BBK No. of services 65 350 85 requests No. of sales order 360 720 316 No. of ads. 35 230 49 Unit volume 750 820 950 Required Page 4 of 5 a. Determine the indirect allocation rate for each cost pool, using the activity-based costing system (ABC). b- Allocate the indirect cost to each customer using the ABC method. c. Suppose all indirect costs had been allocated to customers in proportion of the unit volume. Compute the indirect cost allocated to each customer. d. In which allocation method you have more confidence, ABC or the traditional costing method? Why?