Question 1: The Boom-Box Corporation produces high end speakers for commercial use. They make 3 different models. Under their old cost system, Tele-Vision allocated overhead costs based on direct labor dollars. Recently, the firm adopted an ABC cost system. The move to ABC was due to a price war in the market for special speakers used in dance clubs. The market price for a comparable speaker (DJ-Speakers) was S900. The Boom-Box Corporation could not figure out how their competitors were able to offer such low prices. The following data relates to these special speakers Annual Production Direct Materials Direct Labor 20,000 units S350 per unit $100 per unit Firm-wide Manufacturing Overhead Cost Pools Cost Pool Material Ordering Material Inspection Machine Setup Quality Control Cost $400,000 S300,000 S12,000,000 S500,000 Cost Driver Number of purchase orders Number of receiving reports Number of setups Number of output units (1 inspection for every 20 units) Direct labor costs Rent & other fixed costs Total overhead $15,000,000 S28,200,000 Annual Activit Cost Pool Material Ordering aterial Inspection Machine Setup Quality Control Rent & other fixed costs$5000,000 DL cost (firm-wide cost) All Products 40,000 purchase orders 2,500 receiving reports 4000 setups 100,000 output units 5,000 700 1000 20,000 Required: a. Calculate the unit cost per DJ Speaker under the old cost system. b.Calculate the unit cost per DJ Speaker under the new ABC costing system. Can Boom-Box offer the market price? Would the results change if we used the number of inspections as the cost driver for quality control instead of number of unit? What should the firm do