Ralston Company has four product lines. The Machining product line produces specialized equipment for Oil and Gas exploration companies. Currently, overhead costs are allocated based a traditional, plant- wide overhead rate. The rate was based on $1,000,000 total budgeted overhead and 20,000 machine hours budgeted for the year. Ralston's CEO has heard about ABC, and would like to see if it makes any difference in the costs allocated to jobs in the product line. The accounting staff has provided the following information about budgeted manufacturing overhead and activity if they were to implement activity-based costing: OH Cost Pool Setup Amount $300,000 $500,000 $200,000 Cost Driver Number of setups Inspection Equipment Number of inspections Number of machine hours The product line manager estimates 1,500 setups, 12,500 inspections, and 20,000 machine hours this year. To compare the impact of the choice of allocation methods (traditional plant-wide rate vs. ABC) the CEO decided to evaluate one representative job. Job CRT5050 required 18 setups, 85 machine hours, and 60 inspections. Direct materials and direct labor combined for this job were $8,000. Using the current traditional cost system, Ralston quoted a price of $18,000 for Job CRT5050. a. Based on the current cost accounting system, determine the gross profit expected from Job CRT5050? b. Using ABC, determine the gross profit expected from Job CRT5050? c. Why do the two methods yield such different answers? d. Assume that Ralston implemented activity-based costing; determine the price that should have been quoted in order for the firm to achieve a target gross profit percentage of 30%.