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Alcatraz Company makes two models of an antitheft device. The portable model is relatively small and is primarily for use in automobiles. The standard model is much larger and is designed for houses and buildings. The Fabricating Department cuts, bends, and welds sheet metal to produce the external box of the device. The box is also painted in this department. The Assembly Department uses purchased parts to produce the internal workings and fits them into the prepared metal boxes. Alcatraz has conducted a special study to determine if an activity-based costing systen would be beneficial in determining the costs of the two products. The Fabricating Department is a more complex department than the Assembly Department and has been chosen for a pilot test of an ABC system. The following activities have been identified, along with their associated costs Depreciation.m $250,000 125,000 75,000 150,000 100,000 50,000 25,000 125,000 60,000 Inspection. Factory maintenance Product engineering changes... The analysts have identified the following potential activity drivers and the capacity of cach: Direct labor ($10 per hour Machine hours.... Portable Standard $75,000 $90,000 4,000 6,000 1,500 1,500 150 350 $450,000 s650,000 Number of moves Number of setups Units produced... 15,000 17.500 1. Classify each activity according to activity level and identify an appropriate driver for each (1 Mark) 2. Create homogeneous cost pools and calculate pool rates. (Use the number of setups as the activity driver for both inspection and setups costs. Machine hours serve as the activity driver for depreciation, factory lease, factory maintenance. and department manager salaries.) (1.5 Marks) 3. Use the pool rates to compute per unit overhead costs for the two products 4. Identify the factors that need to be consider, while implementing ABC costing and possible (1.5 Marks) benefits can be achieved by changing traditional costing to ABC costing?2 Marks) Alcatraz Company makes two models of an antitheft device. The portable model is relatively small and is primarily for use in automobiles. The standard model is much larger and is designed for houses and buildings. The Fabricating Department cuts, bends, and welds sheet metal to produce the external box of the device. The box is also painted in this department. The Assembly Department uses purchased parts to produce the internal workings and fits them into the prepared metal boxes. Alcatraz has conducted a special study to determine if an activity-based costing systen would be beneficial in determining the costs of the two products. The Fabricating Department is a more complex department than the Assembly Department and has been chosen for a pilot test of an ABC system. The following activities have been identified, along with their associated costs Depreciation.m $250,000 125,000 75,000 150,000 100,000 50,000 25,000 125,000 60,000 Inspection. Factory maintenance Product engineering changes... The analysts have identified the following potential activity drivers and the capacity of cach: Direct labor ($10 per hour Machine hours.... Portable Standard $75,000 $90,000 4,000 6,000 1,500 1,500 150 350 $450,000 s650,000 Number of moves Number of setups Units produced... 15,000 17.500 1. Classify each activity according to activity level and identify an appropriate driver for each (1 Mark) 2. Create homogeneous cost pools and calculate pool rates. (Use the number of setups as the activity driver for both inspection and setups costs. Machine hours serve as the activity driver for depreciation, factory lease, factory maintenance. and department manager salaries.) (1.5 Marks) 3. Use the pool rates to compute per unit overhead costs for the two products 4. Identify the factors that need to be consider, while implementing ABC costing and possible (1.5 Marks) benefits can be achieved by changing traditional costing to ABC costing?2 Marks)