Question 2: (40 marks total) Great Canadian Cookie Company manufactures and sells three flavors of cookies: Fudge, Sugar, and Buttercream. The batch size for the cookies is limited to 1,000 cookies based on the size of the ovens and cookie molds owned by the company. Based on budgetary projections, the information listed below is available: Projected sales in units Fudge Sugar Buttercream 500,000 800,000 600,000 Per Unit data: Selling price $0.80 $0.75 $0.60 Direct materials $0.20 $0.15 $0.14 Direct labour $0.04 $0.02 $0.02 Overhead cost based on direct labour hours (traditional system) $0.30 $0.15 $0.15 Hours per 1,000-unit batch: Direct labour hours 2 1 1 Oven hours 1 1 1 Packaging hours 0.5 0.5 0.5 Total overhead costs and activity levels for the year are estimated as follows: Overhead costs Activity levels Activity Direct labour Oven Packaging 2,400 hours 210,000 1,900 oven hours $150,000 950 packaging hours $360,000 Required a) Using the traditional (simple) costing system, determine the operating profit per unit for the sugar cookie. b) Determine the activity cost driver rate for oven costs and packaging costs. c) Using the ABC system, for the sugar cookie: i. compute the estimated overhead costs per unit. ii. compute the estimated operating profit per unit. d) Explain the difference between the profits obtained from the traditional system and the ABC system. Which system provides a better estimate of profitability? Why?