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Allison has recently directed Sandra Chamberlain, her Finance Manager, to implement an activity- based costing system. At Sandra's request, the company's accountant and production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools. Overhead Cost Pools Purchasing Production (cutting, milling, finishing) Setting up machines Inspecting Utilities Activity Cost Drivers Number of orders Direct labour hours Number of setups Number of inspections Square metres occupied Total Drivers 600 90,000 2,000 3,000 60,000 During this month, the company received an order for 60 doors from a housing development contractor. The accountant prepares cost estimates for producing the 60 doors so that Sandra can submit a contract price per door to the contractor. The following data for the production of 60 doors is accumulated: I Direct materials Direct labour Machine hours Direct labour hours Number of purchase orders Number of machine setups Number of inspections Number of square metres occupied $140,000 $150,000 15,000 13,000 60 70 880 5,000 1. Calculate the predetermined overhead rate using traditional (job) costing with machine hours as the basis. 4 marks 2. Calculate the manufacturing cost per door under traditional (job) costing. 6 marks 3. Calculate the manufacturing cost per door under the proposed activity-based costing. 6 marks 4. What would you recommend to management? Provide the reasoning for your recommendation. 4 marks