Question 4: Jerash Printing Company produces a range of diaries and notebooks that are sold only online through the company's website. Customers have the opportunity to customize their purchasing orders by selecting designs for the front and back covers of the notebooks or/and diaries. Jerash Printing Company currently uses a traditional overhead allocation costing system based on machine hours to allocate manufacturing overheads to products. In year 2020, the company achieved a loss in its income statement for the first time since its commencement in 2013. The General Manager is very concerned and has suggested that the prices of all products should be increased by 25%. He also suggested that the problem relates to overhead allocation. As a result, the company has adopted the activity based costing (ABC). The below information shows that customers place individual orders and then discuss the design of the notebooks or diaries using emails. The artwork costs depend on the number of setups required to compile the notebook or diary. In addition, the company has a policy of dispatching each order individually. The tables below show the information related to the most recent trading period and two orders recently received: Overhead costs Amount Activity drivers Total activities Ordering costs JOD 7.200 Total orders received Design costs JOD 28.500 Total design consultation emails Artwork costs JOD 17.2501 Total artwork setups Dispatch costs JOD 10.800 Total packets Gispatched Total machine hours 48.000 356.250 115.000 90.000 21.250 Details of the two orders received Order 1: Notebook x Order 2 Diary Y Direct materials JOD 1.86 JOD 1.24 Direct labor JOD 0 52 300 0.68 Machine hours required 0.2 machine hour 10.3 machine hour Number of design consultations 3 Number of artwork Setups required 4 8 As a Senior Expert at the company, you are required to: 1. Determine the total manufacturing cost per unit of each of the orders received using the existing traditional overhead allocation base. (3 Marks) 2. Determine the total manufacturing cost per unit of each of the orders received using the activity based costing (3 Marks) 3. Explain to your General Manager the results you found in requirements 1 & 2 above. (4 Marks)