Question: C3 A. Al Ayan Engineering LLC was established in the year 2018. The company is involved in the manufacturing of Desktop and Laptop computers. It

C3 A. Al Ayan Engineering LLC was established in the year 2018. The company is involved in the manufacturing of Desktop and Laptop computers. It is planning to introduce ABC method of costing to refine its existing system of costing. The details of various costs involved is given below: Cost Pool Amount - OMR Engineering 85000 Setups 15000 Labor 60000 Inspection 50000 Factory lease 15000 Factory utilities 45000 Advertising 25000 Training 22000 Demand Creation 40000 Maintenance of 45000 Jeaves The following cost drivers and their capacities have been identified: Activity driver Practical Capacity Labor hours 5500 Setup hours 3200 Engineering hours 1600 Inspection hours 2000 Machine hours 8000 Number of employees 650 Percentage increase 15000 In sales The cost of the facility-level activities is assigned using machine hours. You are required to create homogeneous cost pools. Identify the activities that belong to each pool and the activity driver that will be used for computing pool rates (5 Marks) B. If Al Ayan Engineering LLC wants to follow the Target Costing, what will be the process of target costing that the company should follow-Explain with examples? 15 MARS

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