QUESTION 3 (20 MARKS) The Fleming Company of Anguilla (FCA) designs and produces automotive parts. In 2019, actual variable manufacturing overhead is $280,000. FCA's simple costing system allocates variable manufacturing overhead to its three customers based on machine-hours and prices its contracts based on full costs. One of its customers has regularly complained of being charged noncompetitive prices, so FCA's controller Matthias Hodge realizes that it is time to examine the consumption of overhead resources more closely. He knows that there are three main departments that consume overhead resources: design, production, and engineering. Interviews with the department personnel and examination of time records yield the following detailed information: Department Design Production Engineering Total Cost Driver CAD design hours Engineering hours Machine hours Manufacturing Overhead in 2019 $ 35,000 25,000 220,000 $280,000 Usage of Cost of Drivers by Customer Contract Gumbs Connor Richardson Motors Motors Auto 150 250 100 130 100 300 3,700 1,000 270 Required iv. How else might FCA use the information available from its department-by-department analysis of manufacturing overhead costs? (1 mark) FCA's managers are wondering if they should further refine the department-by- department costing system into an ABC system by identifying different activities within each department. Discuss the two (2) advantages and two (2) disadvantages of an ABC system, if it is to be implemented in this context? (4 marks) Use of information (1 mark) Two (2) advantages- (2 marks) and two (2) disadvantages (2 marks) (1 mark for each advantage and each disadvantage)