1. Vadilal Inc. produces three different paper products at its St. Thomas plantGreat, Good, and Average. Each product has its own dedicated production line at the plant. The company currently uses the following three-part classification for its manufacturing costs: direct materials, direct manufacturing labour, and indirect manufacturing costs. Total indirect manufacturing costs of the plant in May 2018 are $150 million ($10 million of which are fixed). This total amount is allocated to each product line on the basis of direct manufacturing labour costs of each line. Summary data (in millions) for May 2018 are

Great Good Average

Direct material cost $84 $54 $62

Direct Manufacturing Labour Costs 14 28 8

Indirect Manufacturing Costs 46 88 28

Production 9kg 12 kg 10kg

1. (i)Compute the total manufacturing cost per kilogram for each product produced in May 2018. Compute the total variable manufacturing cost per kilogram for each product produced in May 2018.
2. (ii)Suppose that in June 2018, production was 12 million kilograms of Great, 16 million kilograms of Good, and 18 million kilograms of Average. Why might the May 2018 information on total manufacturing costs per kilogram be misleading when predicting total manufacturing costs in June 2018