Sono bron (a) Comment on the potential problems of using a labour-based cost driver to allocato overhead to products, and discuss why companies still adopt traditional absorption couting despite the problems (6 mankem 210 words) Using an example, explain one of the potential benefits of using ABC to locale overhead to products 13 marks, mix 105 words) ABC Ltd makes three products and applies overhead using a predetermined rate based on direct labour hours. The management accountant of this company recommended switching to activity-based costing (ABC). The following activities, cost drivers, and costs are identified and estimated for 2021. The company also estimated 1,000 labour hours (wage rate= 10/hour) would be worked (0) Using the information provided above ) Calculate overhead allocation rates for each of the cost drivers recommended by the management accountant, as well as the absorption allocation rate for direct labour hours (10 marks) Annualesmates Costs Activities Activity Production setup 100 Recommended cost driver Number of production Tuns Number of orders Pounds of materials used Machine hours Order processing Material handling 50,000 10,000 30,000 100,000 200 15.000 01) Using the activity allocation rates Calculated in () ) estimate the production costs for each product for 2021 121 marks) 10.000 Equipment depreciation and maintenance Qualty management Packing and shipping Total estimated overhead 100 10.000 Number of inspections E50,000 Number of units shipped C80,000 300,000 (W) Using the absorption location rate calculated in () (0 strain the production costs for each product for 2021 (3 mars Discuss which product(s) is kely to be over-costed (1 mark max 35 words The following activities occurred in 2021 (e) Discuss whether and why you agree (or disagree with the management accountant's suggestion to switch to ABC o mar max 210 words) (Total marks for question 1: 50 marks) Number of units produced Direct materials costs Direct labour hours Number of production runs Number of orders Pounds of materials used Machine hours Number of inspections Number of units shipped Product Product B Product 2.000 1.000 300 3.000 18.000 5.000 500 300 200 35 20 45 55 105 40 8,500 1.500 5.000 5,500 3.000 1.500 35 40 25 2500 2.000 5.500 REQUIRED Please note: a maximum word count applies to some parts of this