XYZ Ltd manufactures Model A, Model B, Model C and Model D. Details of the four products and relevant information are given below for one period: Model A Model B Model C Model D 100 30 300 20 Output (units) Costs per unit (/unit) Direct material Direct labour Machine hours per unit (hrs/unit) 50 60 70 50 30 20 20 30 4 20 4 The four products are produced in production runs of 10 units and the production overhead costs are absorbed on the basis of machine hours. The following breakdown of costs has been identified by the company: Machine department costs () 13,240 (rent, business rates, depreciation and supervision) Set-up costs () 2,250 Stores receiving () 4,200 Inspection / quality control () 1,350 Material handling and dispatch () 1,800 The following cost drivers have been identified by managers at XYZ Ltd for allocating overhead costs: Cost Cost driver Set-up costs Number of production runs Stores receiving Requisitions raised Inspection / quality control Number of production runs Materials handling and dispatch Orders executed The number of requisitions raised on the stores was 21 for each product and the number of orders executed was 45, each order being for a batch of 10 of a product. REQUIRED: Please note: a maximum word count applies to parts (a) and (d) of this question ONLY. There are no maximum word counts for parts (b) and (c). (a) Please note: the maximum word count for this requirement is 315 words. Which changes in the modern business environment have led to the need for Activity- Based Costing (ABC) to replace more traditional approaches? Ensure you explain why these changes make ABC important. (b) Please note: Explain your calculations in detail in addition to showing workings. Using the information provided above: (0) Calculate the total costs for the total production output of each product line if all overhead costs are absorbed on a machine hour basis. (7 marks) (i) Calculate the total cost for the total production output of each product line, using ABC (19 marks) (c) Calculate and list the unit product costs from your figures in (b) (i) and (b) (i) above, to show the differences between the ABC and traditional costing approaches. Comment briefly on any conclusions which may be drawn which could have pricing and profit implications (7 marks) (d) Please note: the maximum word count for this requirement is 280 words. Discuss further the differences between ABC and the traditional absorption costing in terms of the indirect cost allocation through the two-stage allocation process. (8 marks)