Question three You have been asked to attend a meeting scheduled with the Head of Marketing for Da Jiqi LLC, an engineering supplies company in Chongqing, China. The first item on the agenda is termed Activity Based Costing (ABC). You have selected the following data to prepare for the meeting: Cost driver/Product Blue White Red 80 300 2013066 Number of sales orders Number of service calls Number of normal deliveries Number of after sales support requests 110 380 38 22 922 Product activity costs Annual budgeted costs (RMB) Cost Driver Sales order processing Customer data base maintenance Normal delivery 190,000 30,000 138.000 Number of sales orders Number of service calls Number of normal deliveries Number of after sales support requests After-sales support 9,000 *RMB stands for renminbi, the Chinese currency. Gross profit contributed by each product Blue White Red RMB 150.000 RMB 240.000 RMB 82,500 Required: a) What is the percentage that each product contributes to the overall gross profit as stated above? (2 marks) b) Calculate the ABC cost driver rates based on the information above. (5 marks) c) Calculate the costs attributable to each product, based on ABC. (5 marks) d) Based on your results in (c), calculate the profit/loss of each product. Which one is the most profitable product? (5 marks) e) ABC has many advantages, at least on paper, but also many disadvantages. Discuss the limitations of ABC. (8 marks) Total 25 marks