Question 5 (8 marks) Specialty (SDI) recently started operations to obtain a share of the growing golfing market. SDI manufactures two models of specialty drivers: the Thunderbolt model and the Earthquake model. They want to update their costing system in 2017, changing from a single overhead application rate using direct labour-hours to activity-based costing The controller has identified the following three activities as cost drivers, along with the related cost of the pools: Model Number of Material Requisitions 600,000 Number of Product Inspections 75.000 Number of Orders Shipped 250,000 Total Cost in the Cost Pool 250 Thunderbolt Earthquake 800 400 Total Activity Level Budgeted Overhead Rate Required: a. Using ABC, complete the schedule above and calculate the total activity level and the budgeted overhead rate for each activity b. What would the total overhead allocation be to the Thunderbolt driver in 2017? Show calculations. Beaver Paddle Company's most recent income statement is pre- sented below: d. The sales manager is convinced that a $8,000 increase in the advertising budget would increase total sales by $25,000. Would you advise the increased advertising outlay? (4 marks) Sales Less variable expenses Contribution margin Less fixed expenses Net loss $75,000 37.500 37.500 40.000 -$2.500 The company sells its only product for $15 per unit. There were no beginning or ending inventories. a. Compute the company's break-even point in units sold. (3 marks) b. Compute the total variable expenses at the break-even point. (2 marks) c. How many units would have to be sold to earn a target profit of $10,000? (2 marks)