Question 1 (25 marks) Cookware Company manufactures two products, Deluxe and Regular, and uses a traditional TWO-stage cost allocation. The first stage assigns all factory overhead costs to two production departments A and B, based on machine-hours. The second stage uses direct labor hours to allocate overhead to individual products. For 2022, the firm budgeted $1,100,000 total factory overhead cost for these operations. Production Department A Production Department B Machine-hours Direct labor-hours 4,000 20,000 16,000 10,000 The following information relates to the firm's operations for the month of April: Deluxe Regular Units produced and sold 200 800 Unit cost of direct materials $100 $50 Hourly rate of direct labor $25 $20 Direct labor-hours in Department A per unit Direct labor-hours in Department B per unit 2.0 2.0 1.5 1.0 Cookware Company is considering implementing an activity-based costing system. Its management accountant has collected the following information for activity cost analysis for 2022: Activity Materials movement Budgeted Overhead (S) 7,000 Machine setups 500,000 Inspections Shipment 588,000 5,000 Cost Driver Number of production runs Number of setups Number of units produced Number of shipments Budgeted Driver Consumption Cost Driver Quantity Number of production runs 350 Deluxe 15 Regular Number of setups 500 25 Number of units produced Number of shipments 19,600 250 200 50 12888 20 50 800 100 Required: a. Calculate the overhead cost per unit for each of the two products under the existing TWO- stage cost allocation. (13 marks) b. Calculate the overhead cost per unit for each of the two products under the proposed Activity Based Costing. (12 marks)