Q1. (25 marks) - Activity - Based Costing Answer the following questions using the information below: Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year: Cost Pool Overhead Costs Cost driver Activity level Supervision of direct labour $320,000 Direct labour hours 800,000 Machine maintenance $120,000 Machine hours 960,000 Facility rent $200,000 square metres of area 100,000 Total overhead costs $640,000 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labour- hours 200 Machine-hours 1,600 square metres of area 50 Required: If Gregory Enterprises uses a simple cost system based on direct labour hours then what amount of indirect costs will be allocated to the Mossman job? What is the activity rate for machine maintenance costs? If Gregory Enterprises uses an ABC system then what amount of indirect costs will be allocated to the Mossman job? When selling prices are based on costs assigned using the single cost driver, direct labour hours, then would the Mossman job be overbilled or underbilled What are the benefits of ABC Page Break