Star Peripherals Ltd manufactures two different multifunction printers (MFPs) for the business market. Information of the two models of products is available as follows: Basic Model Advanced Model Direct material Direct labour Labour hours per unit Units produced $800 $1,600 300 600 10 hours 3,000 units 20 hours 500 units The total manufacturing overhead for the whole plant is estimated at $1,600,000. In the current year, the company is using the traditional costing system which allocates manufacturing overhead to the products based on a plantwide overhead rate per direct labour hour. From next year onwards, the company has planned to implement an activity-based costing system to allocate its manufacturing overhead costs to the products. The activity cost pools identified and the activity driver data are estimated as follows: Activity drivers Activity cost pool (cost driver) Activity costs Basic model $ Machine setup (no. of setups) 300,000 50 setups Material receiving (kgs of materials) 180,000 30,000 kgs Inspection (no. of inspections) 160,000 700 inspections Machinery-related (machine hours - MH) 960.000 20,000 MH Total manufacturing overhead 1,600,000 Advanced model 150 setups 50,000 kgs 900 inspections 40,000 MH Q1 Required: (a) Calculate the costs per unit of the two products using the two costing sms: (i) Traditional costing system (ii) Activity-based costing system (16 marks) (b) Based on your calculations in (a) above, explain which product is overcosted and which product is undercosted using the traditional costing system AND briefly discuss the impact of product overcosting and undercosting to the organisation. (4 marks) Q2 Required: For the purpose of preparing the monthly performance report for the last month, calculate the following cost variances: Direct material price variance (DMPV) Direct material quantity variance (DMQV) Direct labour rate variance (DLRV) Direct labour efficiency variance (DLEV) Variable overhead spending variance (VOHSV) Variable overhead efficiency variance (VOHEV) Fixed overhead budget variance (FOHBV) Fixed overhead volume variance (FOHVV) (2.5 marks each x 8 variances = 20 marks)