"See, I told you we made a good decision by introducing the Business and Deluxe chairs. Look at the profits generated by the two chairs that we are selling at a premium." These were the words of Linda Badger, CEO of Badger Chair Company (BCC). However, Steve Radcliffe, the VP of operations, did not echo her enthusiasm. "Linda, I must say my people on the shop floor are not too happy with the accounting report. They are still unable to believe that the Business and Deluxe chairs made money. According to them the production of these chairs created nothing but problems." Badger Chair Company makes four different types of chairs: Regular, Standard, Business, and Deluxe. The latter two types of chairs were introduced in 2022. The production and sales of each type of chair were as follows during the last two years: Business Deluxe 2021 2022 Price (2022) Regular Standard 25,000 25,000 20,000 20,000 $ 37.9 $ 45.9 5,000 $ 70.9 5,000 $ 99 BCC uses a normal costing system wherein it traces direct material and direct labour costs to the individual products and allocates overhead costs by applying predetermined departmental overhead rates to the actual volume of the allocation base pertaining to each department. For 2022, the following overhead costs were estimated in each of the two departments: Machining department Assembly department Estimated Overhead Cost and Activity Level $ 586,000 (206,000 machine-hours) $ 651,600 (349,000 direct labour-hours) Consider the following information regarding the actual consumption of resources by each of the four products in 2022: Machine-hours Direct labour-hours Prime costs (per unit) Regular 91,000 130,000 $ 18.1 Standard 82,000 150,000 $ 25.9 Business 18,000 30,000 $ 37.9 Deluxe 15,000 39,000 $ 42.9 Required: 1. Compute the profitability of each type of chair (please show all the computational steps). 2. In late 2022, Linsey Lindsay, the chief cost accountant, attended a week-long workshop entitled "Advanced Cost Management Methods" offered at a local university. One particular concept she caught on to was activity-based costing, which she decided to implement. She found that the total overhead of $1,237,600 consisted of five cost items and six different activities. Upon further analysis, she determined the proportions in which four of the five cost items were consumed by the six activities (facility-level costs are not to be allocated to the activities). Indirect Labour Engineering Salaries and Salaries and Benefits Benefits ($276,000) ($336,000) 20% 10% 20% 10% 40% 45% 25% 20% 10% 100% 100% Utilities ($218,000) 35% 40% Depreciation ($173,600) 40% 40% Machining Assembly Machine setup Engineering Production planning Maintenance Administrative Costs ($234,000) N/A NA N/A N/A N/A N/A 25% 100% 20% 100% She further determined the following consumption of resources across the four products: Total 63 Number of batches Setup time per batch Machine-hours Labour-hours Maintenance calls Maintenance-hours Engineering-hours Regular 8 1.5 91,000 130,000 40 236 166 Standard 10 1.0 82.000 150,000 32 210 156 Business 20 2.0 18.000 30,000 20 198 112 Deluxe 25 3.0 15,000 39,000 18 176 206,000 349,000 110 820 570 136 2-a. Prepare a table listing the different activities, costs associated with each activity, the appropriate allocation base and the allocation rate for each activity. 2-b. Using the above activity rates, assign the costs to each of the four types of chairs and determine their profitability. For simplicity, assign the facility-level costs equally among the four products. 3. This part of the question is not part of your Connect assignment. Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Reg 2B Compute the profitability of each type of chair (please show all the computational steps). (Negative values should be indicated by a minus sign. Round predetermined overhead rate to 2 decimal places. Round "Price", "Prime costs" "Gross margin%" answers to 1 decimal place and "Gross margin/unit" answers to 2 decimal places.) Regular Standard Business Deluxe Overall Sales (units) Price Prime costs Sales revenue Prime costs Overhead costs Total costs Gross margin Gross margin/unit Gross margin %