Question 1 Costing Activity-based (TOTAL: 20 marks) Part A Hardwood Limited has an activity-based costing system with three activity cost pools: Processing, Setting up and Other Costs in the Processing cost pool are assigned to products based on machine-hours (MHS) and costs in the Setting up cost pool are assigned to products based on the number of batches. Costs in the other cost pool are not assigned to products. Data concerning the two products and the company's costs and activity-based costing system appear below. Activity cost pools: Processing $12.200 Setting up $25.100 Other $17.700 MHS Product Red Product Blue Total Batches 2.400 17.600 20.000 700 300 1.000 Product Red Product Blue Sales (total) $135,700 $98.000 Direct materials (total) $61.700 $31.000 Direct labour $52,200 545,800 Determine the product margins for each product using activity based costing. Show your calculations. (12 marks) (total) Type in where and the end Part B At a recent staff meeting, Daniel Hamburg - the production manager -raised concerns that John Healy - the newly recruited management accountant - is not considering all manufacturing costs while calculating product costs under the activity-based costing system. While John was attempting to address Daniel's concern during the meeting, Tang Chu - the CEO-stopped him as the meeting had to finish soon. However, Tang told John to prepare a report addressing Daniel's concern, which needs to be submitted before the next meeting. Imagine yourself as John and prepare the report Maximum word limit: 240 words (8 marks)