Question 3 (18 marks)

Renewal Design Pte Ltd ("RD") designs artwork for companies for their advertisement campaigns. Two of RD's customers are Saturn Pte Ltd ("Saturn") and Jupiter Pte Ltd ("Jupiter").

The selling prices and other information about Saturn and Jupiter's orders for 2020 are shown in the tables below. RD would like your help to analyse the cost information and evaluate whether the selling prices charged for Saturn and Jupiter are appropriate.

Batch Order No.	Date of Order	No. of Design(s) Ordered
1	3 Feb 2020	1
2	19 May 2020	2
3	1 Sep 2020	1
4	20 Nov 2020	1

Batch Order No.	Date of Order	No. of Design(s) Ordered
1	27 Apr 2020	8
2	8 Oct 2020	12

RD has also provided you the following information from its budget for 2020.

Number of Direct Labour Hours (DLH) per design	10 Direct Labour Hours per design
Direct labour cost per DLH	$300 per DLH
Direct materials cost per design	$200 per design
Overhead cost for the year	$1,600,000
Total Number of Customers	500 customers
Total number of designs	2,000 designs
Total number of orders	200 orders

RD has identified three Activity Cost Pools for the overhead cost and the associated activity cost drivers as shown below.

Activity Cost Pool	Activity Cost Driver	Total Amount for the Year
Quality Control Supervision	No. of designs	$600,000
Order Processing	No. of orders	$300,000
Customer Relationship Management	No. of customer	$700,000
Total Overhead		$1,600,000

1. Using the Activity-Based Costing Method, determine the Total Cost per design for

1. Saturn.

2. Jupiter.

Show your workings clearly

[15 marks]

1. Based on the information provided in the question, discuss whether RD should use Traditional Costing Method or Activity-Based Costing Method. Provide justifications. Note: No calculations required.

[3 marks]