2 (35 marks) Planet9 Co., recently introduced a product called Vatik in order to complement its other products, Nova and Yeta. The accountant used to allocate the indirect cost according to the units produced. With the recent addition of an expanded computer system, Plante9 would like to investigate the possibility of implementing ABC. Before making a final decision, management has come to you for advice. You collected the following information regarding manufacturing overhead: Table (1) Mfg. Overhead Mfg. Overhead Costs Allocation bases Set-up Ordering materials Handling materials Inspection $ 50,000 Number of set-ups $ 50,000 $ 8,000 $ 22,500 Number of material orders Number of times material was handled Number of inspection hours $130,500 Table (2) Products Activity Vatik Nova Yeta Total Number of set-ups Total Number of material orders 5 20 55 1 2 7 Total Number of times material was handled 1 2 17 Total Number of inspection hours 2 10 Number of units produced 6,000 3,000 1,000 Required: 1. Calculate the manufacturing overhead allocated for each product under ABC method. (20 marks) 2. Calculate the manufacturing overhead allocated for each product under the traditional costing method. (5 marks) 3. Prepare a table showing the cost distortion for each product under the two methods. (10 marks). Which of the two methods you would recommend and why