Question 2 (25 marks) Unidac Electronic Company (Unidae) manufactures and sells Al voice-control lamp. The company's business includes three main product lines. Revenue and cost data of the three product lines in April 2020 are as follows: Product Moko Rono Lati Units produced and sold 200 600 1.000 Unit selling price $1,500 $450 $350 Direct materials $31,500 $70,000 $124,600 Direct labor $25,000 $25,000 $100,000 Direct labor hours consumed 270 hours 630 hours 900 hours The company adopts a simple costing system by allocating the indirect costs based on direct labor hours which are consumed by the product lines. Assignment File Indirect costs incurred in the month includes: Activity Design and engineering Machining and assembly Processing orders Quality control 250,000 175,000 25,000 50,000 500.000 Unidac's management accountant has analysed the costing records to understand how the products use the activities during the operating processes. The following data for Apnl are collected from the operation teams: Unidac's management accountant has analysed the costing records to understand how the products use the activities during the operating processes. The following data for April are collected from the operation teams: Activity Cost Driver Moko Rono Design and engineering 240 100 No. of engineering bours No. of machine hours No. of orders No. of inspection Machining and assembly Processing orders Quality control 200 300 20 60 (15 marks) Required: (a) For the month of April, prepare the product line income statement for the three products using (1) the current simple costing system based on direct labor hours; and (ii) the activity-based costing system. Note: Total company income statement is not required. Show all your working clearly (b) (4 marks) Compare and explain the differences of profitability of each product line under the simple costing system and the activity-based costing system. Your answer should include an analysis of the indirect overhead consumption of each product line. (c) (3 marks) Which costing approach makes more sense for Unidac to determine product pricing? Briefly explain. Based on that costing approach, what recommendation(s) will you give to Unidac's management? (d) Identify three main costs or limitations of an activity-based costing system