Question 5-Activity-Based Costing and Management [20 Marks] Hopkins Ltd manufactures electric motors for commercial use. The company produces three models called standard, deluxe and heavy duty. The company uses a job costing system with manufacturing overhead applied on the basis of direct labour hours. The system has been in place with little change for 25 years. Product costs and annual sales data are as follows: Annual sales (units) Standard model 20 000 Deluxe model 1 000 Heavy-duty model 10 000 Product costs: Raw material $ 10 $25 $ 42 Direct labour 10 (0.5 hr @ $20) 20 (1 hr @ 20 (1 hr @ $20) $20) Manufacturing overhead* Total product cost 85 $ 105 $ 215 170 170 $ 232 *Calculation of predetermined overhead rate: Manufacturing overhead budget: Depreciation, machinery $1 480 000 Maintenance, machinery 120 000 Depreciation, taxes and insurance for 300 000 factory Engineering 350 000 Purchasing, receiving and shipping 250 000 Inspection and repair of defects 375 000 Material handling 400 000 Miscellaneous manufacturing overhead 295 000