Singapore Fabrication Co. produces parts for the steel industry. It pools overhead costs in to 3 categories: machine operating costs, engineering and inspecting costs. The expected costs for the coming year are as follows: Machining S160000 Faging 220.000 Inspecting 1 00 SO DOO Singapore Fabrication currently uses machine hours to apply overhead. Expected capacity is 100.000 machine hours. The plant manager, Peter, has been asked to submit a bid on a potential job. He provides you with the following data for this job: Det er Director $12.00 Overload Number of inspections Number of m ine hus 2000 Engineering hours Other firms will also be competing for the job. Most of the competitors are using the ABC overhead allocation method. Peter wants to compare his bid using his existing and ABC approaches. He estimates that there will be 6,000 inspections, and 10,000 engineering hours consumed in the plant next year. Required 1. Determine the total cost of the potential job under Singapore Fabrication's existing method, using machine hours to apply overhead. Assume that the bid price is based on full manufacturing cost plus 25% mark up. What is Peter's bid price? (2 marks) 2. Determine the total cost of the job using an ABC approach, with the number of inspections to assign inspection costs, engineering hours to assign engineering costs, and machine hours to assign machining costs. Assume the same bid pricing approach as in (1): what is Peter's bid price? (4 marks) 3. Which approach, the existing method or ABC approach, do you think better reflects the real cost of the job? Explain in full (in your own words) you must apply the relevant theoretical concepts to the case-facts provided. You cannot state the theoretical concepts alone, without relating it to the case-facts. (6 marks) 4. The production manager suggested to Peter that inspection hours would provide a better cost assignment for jobs than using number of inspections. The plant can carry out 12.000 inspection hours per year. The job in question is expected to consume 60 inspection hours. Calculate the effect of this change on the job's bid price. Explain why inspection hours is a better or worse driver than number of inspections