Plovdiv Electronics manufactures two large$-$screen television models: the Royale which sells for BGN $1,600$ and a new model, the Majestic, which sells for BGN $1,300.$ The production cost computed per unit under traditional costing for each model in $2018$ was as follows.

In $2018,$ Plovdiv manufactured $25,000$ units of the Royale and $10,000$ units of the Majestic. The overhead rate of BGN $38$ per direct labor hour was determined by dividing total expected manufacturing overhead of BGN $7,600,000$ by the direct labor hours of $200,000$ for the two models. Under traditional costing, the gross profit on the models was: Royale: BGN $552(1,600-1,048)$ and Majestic: BGN $590(1,300-710).$ Because of this difference, management is considering phasing out the Royale model and increasing the Majestic model.

Before finalizing its decision, management asks Plovdiv's controller to prepare an analysis using activity$-$based costing $($ABC$).$ The controller accumulates the following information about overhead for the year ended December $31,2018.$

a$.$ Calculate the overhead rate for each activity center on the basis of activity$-$based costing. $(28$ points$)$

b$.$ Determine the total cost required to produce one unit of each product. Use the overhead rates calculated in a$.(25$ points$)$

c$.$ Compare the gross profits of traditional method and ABC Costing. Is management's decision a correct one? Why yes$/$no$?(12$ points$)$

d$.$ Chapter $9$ question: Imagine you are cake manufacturer and you use an Ethiopian organic chocolate which is in short supply $($you have a constraint$).$ How can you fix$/$expand this material constraint? $(15$ points$)$