The Automachine Corporation produces three high-quality components and last year allocated all costs except material on the basis of direct labour hours/unit. However, due to the introduction of CAD/CAM and a complete review of the cost allocation system, Automachine Corporation is considering changing its basis of machined component costs. For the following year the budget and production data have been extracted by the machine manufacturing department: Activity 1-Automated machinery total cost Activity 2- Finishing operations total cost Activity 3 - Material handling total costs Activity 4-Packaging and shipping costs Activity 5-Production setup total costs Activity 6-Production scheduling total costs $1,800,000 530,000 130,000 100,000 80,000 60,000 $2,700,000 The most appropriate cost drivers for the six activities have been identified as: machine hours, direct labour hours, number of parts, number of orders shipped, number of production setups, and number of production orders respectively. Based on actual data for the previous year, next year's predicted data for the three high-quality components are as follows: Compu #123 Compu #456 Compu #789 Machine hours/unit 4 4 10 Direct labour hours/unit 1 3 6 Number of parts/unit 15 25 60 Number of orders shipped 500 1,000 400 Number of production setups 50 25 25 Number of production orders 150 35 100 Total units to be produced Direct materials cost/unit 5,000 2,500 400 40 25 55 Required: As the Management Accountant for the Automachine Corporation, prepare supporting schedules for: a) Activity rates for each of the six activities. b) A budget of total costs and unit costs for each of the three components, excluding direct materials. c) The computation of the budgeted total and unit costs using the old direct labour hour based system for each of the three components. d) Comparing the results of (b) and (c) above suggest the most appropriate system, and discuss the pros and cons of using ABC cost drivers.