The following case information is repeated from Question 4. Krystal-clear (KC) manufactures MP3 players and accessories including wireless earbuds. The company was recently approached by Audio 4All (A4), a manufacturer of sound systems, with an offer to supply wireless earbuds for $30 per pair. The cost of manufacturing earbuds for the month of April is extracted from KC's volume-based costing system as follows: $ (per unit) Variable costs: Direct material Direct labour Total units (Each unit = 1 pair of earbuds) 7.50 15.00 20,000 New case information starts here. KC has recently implemented an activity-based costing (ABC) system. The financial controller recognizes that the allocation of overhead costs will be more accurate using data from the ABC system and obtains the following information about activities and their activity drivers. Activity Unit level activity: Packaging Cost per activity driver Activity drivers Quantity of activity drivers consumed by earbuds 100 No. of orders 250 Batch level activity: Machine-related 10 No. of units 20,000 Materials handling 150 No. of batches moved Inspection of prototypes 200 No. of new products 100 5 Facility level activity: Costs of operating the Factory 2 No. of units 20.000 Required 1. Using information from KC's ABC system (i) prepare an analysis of relevant costs and (ii) indicate whether KC should accept or reject A4's offer. (Only direct materials and direct labour costs are unaffected by the type of costing system.) (4 marks)