Required: Use time-driven activity-based costing to answer the following questions about SAS's costs and profitability: 1. What is the capacity cost rate of each of the three overhead resources? (0.75 marks) 2. What would the capacity cost rate of the Machines resource be if its annual capacity dropped by 20%? (This scenario does not apply to any other question.) (0.25 marks) 3. What are the costs of the three overhead resources (Machines, Mechanics, and Engineers) consumed per hour of the Overhaul activity? Provide the three resource costs per activity hour separately. (0.75 marks) 4. How many hours of the Mechanics resource did each customer consume? Provide the three numbers of hours per customer separately. (0.75 marks) 5. What is the total cost per hour of each activity? Provide the three activity costs separately. (1.5 marks) 6. What is the total activity-based customer-related cost for each customer? Provide the three customer-related costs separately. (1.5 marks) 7. Comment on the profitability of the three customers. Hint: Use quantitative information from your analyses to make a qualitative analysis about customer profitability. (1.5 marks) 20Spirit AeroSystems (SAS) provides aircraft maintenance, repair, and overhaul (MRO) services to the aviation industry. Competitors in the aviation industry increasingly recognize the importance of maintaining repairing, and overhauling their fleet. Enhanced fleet safety also plays a vital role in influencing customers' choice of airline carriers. As a result, effective MRO management can not only boost an airline's safety ratings, but influence travelers preferred carrier choice. There are three overhead resources at SAS: Machines, Mechanics, and Engineers. Machines include tools and equipment, as well as specialised computer software to diagnose and fix electronic faults with engine management system, for example. Three primary activities at SAS use these resources. The activities are Maintenance, Repair, and Overhaul. The following table identifies the number of hours of each overhead resource that one hour of each activity consumes: Resource Hours Consumed Maintenance by Activities Repair Overhaul Machine Hours 8.00 11.00 6.00 Mechanic Hours 4.00 14.00 10.00 Engineer Hours 1.50 5.00 15.00 For example, each hour of Maintenance activity consumes 8.00 Machine hours, 4.00 Mechanic hours, and 1.50 Engineer hours. In addition to consuming overhead resources, some activities consume supplies. Supplies cost is a variable cost, and it can be directly attributed to the use of the activity. This means that the cost of the supplies is an integral part of the total cost of each of these activities. Each hour of the Repair activity has a Supplies cost of $1,000. Each hour of the Overhaul activity has a Supplies cost of $2,500. The following yearly information pertains to the three overhead resources used by the three activities. For the Machines overhead resource, total cost was $500,000 and practical capacity was 5,000 hours. For the Mechanics overhead resource, total cost was $1,200,000 and practical capacity was 8,000 hours. For the Engineers overhead resource, total cost was $1,500,000 and practical capacity was 3,750 hours. Finally, the following table summarizes the number of hours of each activity recently consumed by three customers for their aircrafts' MRO services: Activity Hours Consumed Customer 1 Customer 2 Customer 3 Hours of Maintenance Activity 27.50 3.00 21.00 Hours of Repair Activity 15.00 14.50 0.00 Hours of Overhaul Activity 3.00 9.00 10.00 The gross profit for each of the three customers was identical, i.e., $180,000