Question 3 (9 points) Sandy Inc. manufactures one product with a selling price of $190 each. The company currently uses a traditional costing system in which manufacturing overhead is applied to units based on direct labour hours as follows: Total estimated manufacturing overhead $600,000 60,000 DLHS Total estimated direct labour hours The company is considering using activity-based costing (ABC) to allocate overhead and has identified activity cost pools and activity rates as follows: Activity Cost Pool Order processing Manufacturing support Activity Rate $40 per order $3 per machine hour One customer had the following order history for the last 12 months: Number of units Number of orders Direct labour hours per unit Machine hours per unit Direct material cost per unit The direct labour rate is $22 per hour. Required: 2345 $65 1. Calculate the predetermined overhead rate (POHR). (1 mark) 2. Calculate the total product margin using the traditional costing system. (4 marks) 3. Calculate the total product margin using the ABC system. (4 marks) 1:31 PM